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Auction room activity is cooling as the housing market heads out of the peak selling season

Auction room activity is cooling as the housing market heads out of the peak selling season

Residential auction activity continues to cool along with the weather.

Interest.co.nz monitored 307 residential property auctions in the week from April 3-9, down by a third compared to each of the previous three weeks when more than 400 properties a week were auctioned.

The number of properties being sold has also fallen sharply, declining for three weeks in a row from 263 in the week of March 13-19 to 165 in the week of April 3-9.

However the most telling sign of a cooling in the market is the sales rate, which has declined for four consecutive weeks from 73% in the week of March 6-12 to 54% in the week of April 3-9.

That means the number of properties being sold at auction is declining at a faster rate than the number of properties being offered at auction.

The most recent sales rate of 54% is also well below the average of 66% over the 10 weeks from January 30 to April 9.

If that trend continues there will soon be more properties being passed in at auction than are sold. 

The table below shows the trend since the end of January.

  Residential Property Auctions
  Monitored by interest.co.nz
  Week Total auctions monitored Number sold % Sold
  30 Jan-5 February 230 166 72%
  6-12 February 319 225 71%
  13-19 February 288 219 76%
  20-26 February 446 305 68%
  27 Feb-5 March 316 223 71%
  6-12 March 302 219 73%
  13-19 March 412 263 64%
  20-26 March 411 255 62%
  27 March-2 April 413 240 58%
  3-9 April 307 165 54%
  Total 3444 2280 66%
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76 Comments

11
up

Greg, how do the most recent figures compare to last year? Is this drop just seasonality or are we seeing an early effect of recent government policy?

Good question. It is important to recognise traditional market trends might still exist and are not entirely swamped by the madcap environment for housing that has headlined the news for month on month.

Small issues of Covid and Easter , would make comparisons year on year meaningless.

20
up

Huge amount passed in this last week gone.

The supply of greater fools is drying up, rapidly.

Most are being passed in with unsuccessful bids at insanely high prices

12
up

In Auckland there were plenty passed in with no bids. Zip. Several were new builds.

20
up

Often one bidder, bidding against themselves to try to meet the delusional reserve. Bloody stupid.

The housing market will remain more resilient than many here dare contemplate.

TTP

Says who? The landlords club? The data is not on your side TTP.

What a privilege to witness Dunning Kruger theory in action right here on a beautiful Saturday.

I think a lot of sellers are trying it on. Short marketing campaigns and Auction. Asking for moonbeams, but not super serious unless they get a big pay-day.

If the clearance rates continue to slide its going to inevitably start to impact price perception, both sellers and buyers.

19
up

Is this the beginning of the end. I hope so for those first home buyers in the market now. They will need to temper themselves. Maybe even step back and watch for trends.

Good time to buy first home. I know of several “investors” who are dumping their loss making south Auckland rentals and then putting the money into moving into a better family home. More likely to be a store of value and if it does go up there is no CGT

Maybe in Auckland.

Meanwhile in Wellington .. Enquired on a 3 bed in Newlands the other day - no luck. Went to cash buyer for high 900's. Also had an agent send a 'coming-soon' listing through by text with the promise of details once it listed. Week later, sold already.

Business as usual down here.

Go set up a protest outside the RBNZ headquarters.

Some signs it is easing in the capital. REINZ median for Wellington city fell in March. And the average only rose 0.1%. Had one agent tell the peak has passed. We will see.

While the outer regions were booming, It also fell for periods In Wellington city at the end of last year too and we all know what happened from then onwards. e.g. Nov-Dec 2020 Wellington city prices fell by 4.5%

Are you trying to buy a 3 bed house under 1M? Time to get realistic

The tax rules are having an impact.

Are stats published on housing waiting list because those are about to explode.

Yet the median house price is up another $40k in March...

13
up

Unless and untill speculative demand is targeted by RBNZ by targeting interest only loan, it may turn to a slight pause before the next flight.

Why does Mr Orr has one policy when it comes to supporting and promoting investors and another when it comes to dealing with FHB and average Kiwi.

10
up

Agree that speculators should have been targeted long time back - ponzi or no ponzi and knowing NZ history, housing speculators should be controlled by taking away undue advantage that they have over FHB through interest only loan that boos / multiply their purchasing power and is this not what Jacinda Arden was preaching - fairness ( no undue advantage to investors).

16
up

Why oh why oh why should an investor get an interest only loan? If they are serious about investing and not pure speculation they will pay the principal. If they are looking to pay the least amount and cash up on capital gains, then they are a speculator. Investors should never be able to get IO loans.

Instead of "if I can't have it neither should you" mentality, you should be advocating owner occupiers to take up interest only loans to level the playing field.

Ban, fines and restrictions are all negative approaches to problem solving in policy making and we wonder why this country is rolling backwards.

Time to be more positive!

Why will anyone need interest only? Unless I am building I don’t need interest only and if I want interest only and not building then it is purely from greed and for speculating.

From your comment, I’d say you are an investor not happy about losing interest only. I am a FHB and I don’t need IO loans and I don’t want to just pay interest. This is my property and I’m not speculating so I want to pay for it not just hold to get capital gains. If you want IO loans that means you cannot afford what you are buying in the first place.

Let everyone not have access to interest only loans, now that’s levelling the field and it’s doing the right thing.

I guess that's why you're still a FHD, you don't seem to understand how interest only works to benefit everyone alike.

14
up

Yeah interest only at zero interest rates...then we can all borrow to infinity! Is that you mr orr?

Non performing loans for "businesses".

13
up

CWBW mate, I rather be a FHB than an unethical speculating investor parasite living off others. I can actually sleep easy at nights knowing I’m not screwing over others to get ahead. I’m happy with that thank you!

Good on ya!

I won't be able to sleep well like you knowing I don't own the place.

Well, you invest in anything to make the most money you can. simple logic I would have thought but hen I don't spend all day on here rambling on. I do stuff.There's talkers and doers. Which one are u?

Passerby, you ask "Why oh why oh why should an investor get an interest only loan?"
It's a very good question and one that would be very beneficial for you to understand. I don't say that in an antagonistic way, it will help you a lot in your future if you can answer your own question honestly and without prejudice.

Do not desperate, just sit and watch, those numbers are from before the new rules took place.

"Do not despair" maybe?

Maybe.

Now there are clearly two markets going differing ways. Investor junk is sliding backwards. Quality family homes (central Auckland $3m-$5m) are in very short supply and shooting up in value. So little choice out there

Would almost underline it was always about tax free gain...

You could be right... which makes the govt slow reponse to act all the more worrying. Suddenly the Ardern admin had to go full ninja to solve something they should have fixed much earlier. Now young buyers are saddled with a lifetime of extra debt

19
up

Well well.
Take a look at the week when sales rate peaked
Yes folks the v week containing Feb 18th

One of the few people here providing very specific predictions, backed by workings. Always enjoy your analysis.

Thank you kind sir.

1 out of 30 predictions correct?

According to their web site today Barfoot's Auckland Central auction on Friday offered 33 properties with only 7 selling under the hammer (21%). Most other auctions did a bit better except for some North Shore ones.

There still seems to be a mania for the full section. Classic two bedroom units also sell if around the mid 700s and below. These have probably lost 50k or so potential with the new tax rules.

At the same time , and happy to be corrected , available stock on market has declined since last government announcement both nationally and in the region of Auckland. Does not appear to be any rush for the exit, although the composition of available property types may have altered slightly. Undoubtedly a fall in auction sales , given their recent spike will start to show thru in overall monthly sales numbers.

Property owners set prices without thinking government regulation change, while buyers became much reluctant following ridiculously high reserve price.

The bit I'm not hearing commentary on is the rental market.

I watch 2 Auckland suburbs, 1 upper quartile, 1 lower.

Both have more rentals available than I've ever seen, and rents seem to be dropping.

Very small sample, and potentially nothing, but is anyone else seeing similar? Could really compound the froth coming off.

Upoer cod remtals....are these homes for old fisherman?

This may be seasonal adjustment or a slight breather but still houses that are been sold are going at premium.

Government and RBNZ should target speculative demand instead of finding such excuse and reason to hide behind as this ponzi has been fueled by them and now only they by their action can control it.

https://www.odt.co.nz/business/property/how-nzs-much-admired-covid-respo...

Unless government and RBNZ has intent, the ponzi will continue but unfortunately rbnz is already ready with script of wait and watch as has no intention in going after speculative demand.

Agree it was Mr Orr's 'lesst regret' attitude that led to current housing ponzi and now if want to control it, will only be possible if he follows the same 'least regret' attitude instead of 'Wait and Watch'.

Why did Orr, not go for wait and watch policy earlier when he was worried that housing market may fall - For the same reason now when housing market is growing in double digit on a monthly basis should not go wait and watch and follow same policy now also of least regret to target demand specially speculative greed to take some heat of FOMO.

10
up

Mr Orr : If it is important to you, you will find a way. If not, you'll find excuse.

Like you found a way of leaset regret and if not you'll find Wait and Watch.

I feel as if there is only one alt account missing here.

23
up

Give it another couple of months, then we'll be entering unconditional LOW BALL offer time. And I'm talking, 20% under asking price. Call me a prick, but I'm not paying anyone for these latest gains.

18
up

Why offer 20% below asking price....when you could wait another six months and get 40% off?

Or wait further?

This could turn into a bloodbath pretty quickly

15
up

You underestimate the power of Jacinda Arden and Mr Orr.

Jacinda has made a commitment that come what may under her, will not allow house price to fall so chill - go out and speculate as you have PM of the country to cover for you along with governor of reserve bank, who is keen and always proactive to support....

Exactly this is what I did not factor in at the beginning of the Pandemic and my 25% price crash prediction turned into a 25%+ price gain outcome.

The opposite. Mr Orr-full pretends he has more control than he has. It’s a charade, based on people believing.

Wonder whenever the PM plays mirror, mirror on the wall, leaving aside frowns, pouts, head tilts, shoulder shrugs and gesticulations how the face of today explains to the face of pre 2017 election, you know the one for instance in the debates spout, spout, promises & assurances ladled out, that that face, was neither credible nor sincere.

Sorry to point it out, but you've got it all wrong. Jacinda and Mr Orr are not that dumb. They are not aside with booming housing market and housing investors. They are only aside with economic and financial stability and their voters. If it risks our economy and their voter support in future, they will take whatever it takes to manage that risk. Don't try to read government's behaviors and policy trends and fully rely on it. When the time comes, you will know your profits and benefits will weigh so little in their decision making process. If you understand why the recent policies took in place, you will understand what I am talking about.

That clearly shows the level of understanding you have of micro and macro markets

I'm going 50% or lower, not in 2 mths though, 12-60 mths.

I'm going 120% lower on 12 months

Imagine everyone lose their job all at once...country wide collapse.

Don't be silly now Yvil, there will be 100,000 FREE houses for anyone who votes for Labour next election.

I'll raise you a free three year university education..

13
up

I have no vested interest in NZ housing, I make all my money elsewhere. I choose to only hold real estate in sane markets. I've seen many property bubbles burst firsthand, the aftermath stays ugly for many years afterward. Generally the worse the bubble the longer the unwinding, decades in some cases. I really dont think it'll be a laugh for anyone that gets burnt in this one.

so when do you think the bubble will burst, oh wait , not in your lifetime...it hasn't for the last 40 years ...

kindness overload !

You are utterly delusional.

Out in the middle of nowhere peasant tenant stock may come off a bit but everywhere else where OO’s are in high demand not a chance

This is exactly what a few FHB I know have been doing for quite some time, it has not worked well for them so far but my feeling is that it will once sellers start experiencing the cold of the market and want out ASAP.

Markets have a habit of overshooting, and at this point in time, its too early to say if this is due to the tax changes, or that the market was ready for a breather.

Good properties, on good sized pieces of land, whether bought for future development, or as a private home have attributes which will attract buyers, whereas a doer upper , ex rental, at the end of its economic life, becomes land value very quickly in this market.

Jacinda Arden and Mr Orr, now it is nit just an housing issue but is a social issue more than economy issue

https://www.newshub.co.nz/home/money/2021/04/explosion-of-wealth-inequal...

You have to act and act fast without passing the buck on each other and not going after reasons to find excuse to avoid taking action or try to delay.

May announcement by Mr Orr will be a judgement day on both government and reserve bank (though it is said than rbbz is independent).

As rightly put in one comment will it least regret approach ir wait and watch.

@gregninness
Thanks for the info... the results of a company, barfoot and thompson, that does half the sales in one city, auckland, that has one-third of the country's population. It adds up to one sixth - 16 percent, of total sales. Is this representative? Please tell me it is and that I am wrong

Auckland region accounts for 29%~ of dwellings in NZ. I would assume the high proportion of all rental properties there by way of apartments, and therefore investor activity, likely means in a given month AKL would account for more like 40% (50?) of property transactions. This concentration of activity also makes it likely a good leading indicator of the market as a whole.
TBF it's the immediacy of the reporting from Barfoot's that Interest jump on more than anything else, there's not a lot of other sources so readily/easily available on a weekly basis.

If we have a housing shortage, why is the sales rate dropping?

We now have a shortage of people who can afford the current prices.

And a (temporary) shortage of sellers who realise that.