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The housing market is starting to settle in for winter as auction volumes decline

The housing market is starting to settle in for winter as auction volumes decline

Activity is slowly declining in Barfoot & Thompson's auction rooms as the market settles towards winter.

Auckland's biggest real estate agency marketed 260 properties for sale by auction in the week of 24-30 April, then 248 properties in the week of 1-7 May and 206 in the week of 8-14 May.

While the number of properties being offered at auction has been declining, the sales rate has remained remarkably flat at around or just over 50%.

In the week of 24-30 April the sales rate was exactly 50%, then edged up to 55% in the first week of May and dipped back to 51% last week.

Sales rates in the main urban districts ranged from 38% in Rodney to 69% in Franklin.

The table below gives the district-by-district sales breakdown.

Details of the individual properties offered at all of the auctions monitored by interest.co.nz are available on our Residential Auction Results page.

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43 Comments

One more week of auction debacle. Agents keep wasting sellers time and money.

Selling property by auction has always been for exceptional properties for normal times or for the majority of properties for extraordinary times.
We have just been through the latter. The auctioneers will be starting to rue the sharp decline in their commissions. Normality will be deemed to have arrived when residential properties are advertised at a definite price with maybe an ono ("or near offer") tacked on. This is what I have observed from over 55 years of following the property market since I bought my first house in 1967 ( for $11,500 ) at the age of 19 years.
So, keep an eye on the advertisements...they will tell you when the boom is over.

Must sell, bring all offers, mortgage....yeah, adverts that contain that sort of stuff.

20
up

The new expectation of prices for vendors is now set in stone. They now actually believe that their rotten old grotty shack is WORTH $2.8 million. The country is ruined for at least a generation. I may come back in 25 years and see how close the Reserve bank can make NZ resemble Zimbabwe. Maybe by then 5% of kiwis will be homeowners and 95% renters.

Agree Groat, Now vendor's expectation are high as everyone wants the moon even though auctions are failing and why not as many vendors are able to get that high price after auction.

Is Groat short for Grumpy Goat ? Yes its a sad situation for the next generation if your parents are still renting but the rest of the world is going to hell in a handbasket and NZ is the only place I would choose to live. Perhaps a trip to Zim or maybe Gaza would have you on the first flight home.

10
up

NZ and Gaza have something in common - locals forced to leave

I think you'll find in gaza it's more a forced to stay and please just die situation...

Well spoken, Carlos.

House prices might be high - but NZ is no third-world, corrupt country.

TTP

It is not...but the trend is what matters.

Funny how opinions change when ppl become home owners? Its a kiwi thing I think.

Agreed, prices are baked in now. The measures taken on 23rd March by Govt were.. 6-9 months too late

They are not, I have already seen a couple of sellers lowering expectations UNDER the reserve price and against what the agents greedily adivced, be prepared for high volatility in the next few months.

"Settling in for winter"
Well, there was no settling last year.
Why are low interest rates not having same impact this year, in terms of forecasting?
Answer: because market needs continual goosing to have same impact.
No goosing now in prospect, so party goers are not coming

Mike its simply a fact that the recent crazy price increases simply cannot continue, the market had to cool and to be honest I'm amazed that the clearance rates are still 50% and prices have not declined. Really all you can say is the NZ house market is just ridiculously resilient. Perhaps some declines are coming but that will only last until they reopen the boarders and house prices move up again with a net inflow.

How can you actually say that if it is not by repeating what you read in the Herald without putting much thought into it?
The market would have plummeted last year if it would have not been for the inexplicable drop in rates from the RBNZ, and as soon as this artificial support is over we will all see where that resilience goes.

Taking away interest deductions for investors as well as increasing the LVRs probably played a role in the stalling sales numbers. This is more like knifing than goosing.

A bit off topic: Can someone enlighten me why someone would try to sell their house as "off the market"? I don't even understand what that means, because it's B&T agents texting me about "off the market" properties. It sure as hell isn't off the market if it's going through B&T.

I think it's when you don't list your house on thier website/TM etc and have openhomes with all the neighbours traipsing through just to be nosey but get the agent to show a few potential buyers through, then negotiate from there.

As an aside CJ, that monniker isn't the name of your boat by chance is it?

No boats here apart from a slow but sturdy sit-on-top kayak

From my understanding its for trying to cash before crash quickly and so word doesn't get around straight away how cheaply it sold

Possibly its a sales & marketing technique used by agents before they publicly list it. You need to be registered with that agent before the place comes up and they contact you and you get a private viewing. Obviously they think the house is what your looking for and in your price range. I guess the opportunity for the RE is they can flip it fast without having to attend a load of open homes and spend the money on marketing it. It also works in the RE's favour in that the home appears to be "Exclusive" and is first being offered to you personally. Had it happen to me a couple of times while I was looking. The RE are also all over you like a rash if your a cashed up buyer.

Number of house offered normally declines in winter and also percentage of sell but what is important the house price are still upand rising, fir now.

As long as government and rbnz does not act to change perception, FOMO will continue and ponzi / tissue paper fight will continue...may pause for anither leap.

Buyers have pulled off the market specially FHB and investors, people do not do that if they have FOMO.

To be honest, why would anyone sell? Even if you made profit from the sale, where/what would you spend it on? Buy another house? I think people need to think about this point, as money sitting idle in a bank loses against inflation - especially with cheap money being printed.

Reality is that housing continues to be (globally) an appreciating asset class where lots of cheap money is being funneled to. Space is finite, and it's a game of Monopoly. The more spots you own, the more wealth/power you will have. This hasn't changed 100 years ago, and won't change for the next 100 years neither.

One thing that has been proven out of this pandemic is that NZ is one of the safest countries in the world. Even if the pandemic situation disappears, and people leave NZ to AU/other countries to chase money/dreams, I would think many people would still keep their safety nest in NZ.

Personally, I would never sell my house in NZ. In fact, I will continue to look to acquire more property here to invest (within my own budget). The changes to the mortgage interest deductions may hurt some investors, however if you are financially savvy, you can recalculate what is that break-even point you need, and continue on your way.

It's not about timing the market. It's about time IN the market. I'm here for good.

"To be honest, why would anyone sell?" - I should imagine there are quite a few buyers these last few years who over leveraged to the max with cheap dollar during peak FOMO and will no longer afford their mortgage repayments as inflation eats away at their income and rising interest rates kick in. Maybe when all the potential FHB's have all left the country and there is nobody left at the bottom silly enough to feed this insane ponzi then maybe investors/speculators/landlords/housing-hoarders might realise the game is up and the firesale will kick in. Well maybe not that last bit.. but that's the dream anyway. Interesting times indeed.

Those with more than one property could sell now and ka-ching, cash in on this tragedy.

Fair enough. I agree what to do wit the proceeds of sale other than create or invest in a productive profitable business. Obviously this is a lot harder and has more moving parts than simple speculating on land appreciating over time. Which is why most don't want to, or cant do that.

I would suggest there most definitely other significant factors that drive prices than just time in market. Interest rates - record low with risk of increase. Mass immigration was at crazy levels and now record low and for the foreseeable future (last nights press release). Record foreign students buying/occupying an apartment are now gone. Mass foreign buyers speculating on NZ market are now significantly reduced/banned. Personal tax minimization strategy being retrenched with a future of being deleted. All of these have had influence to some degree on driving price, and most levers have had significant change with the exception of interest rates, which remain at bank profit life support level .

" I think people need to think about this point, as money sitting idle in a bank loses against inflation"

What inflation - I thought CPI was close to zero? Or is that not true?

This is so confusing....

I agree. My partner and I have owned our place in West Auckland for a year and a half. We have a newborn and are thinking about moving back in with her parents because she is having a tough time with the baby and it is quite a commute for me. Given the recent tax changes the return on equity we would get if we rent our place out doesn't seem to be that great (should have put the house in her name) but if we were to sell the place I have no idea what we would do with the cash. Shares seem ridiculously overvalued and I wouldn't feel confident in commercial property. Any ideas. Also, does anyone know if you can claim interest deductions for the next 4 years if you decide to rent out your family home?

Well that’s pretty good, 50%+ being sold under the hammer and no doubt most of the rest going quickly by post auction negotiation. Back to businesses as usual, before that 3 months of real estate craziness.

Where is TTP to "calm the farm" with his wise, salient words, as to the state of the residential property market. No doubt, he should take time to tap on the keys, on this wee article from his leather bound couch, on his country estate.

In the meantime, I will allay all or any fears from you multiple owning, indebted property owners.....

* It's just a winter "blip" - normal transmission will resume shortly
* Don't worry about interest rates ...a Mr Orr is gallantly keeping those down
* Prices have not reduced in any way - you will still get your $1.75 million for your Mt Roskill 3 bdm "palace"
* It's all about the value of the land - build quality/value added renovations are irrelevant in this market
* New Zealand is attracting professional, skilled people from all over the world, with competitive salary packages & conditions
* The door is bursting at Embassies/High Commissions around the world, as expat Kiwi's look for any opportunity to return to New Zealand..... to buy your 3 bdm Mt Roskill "Palace"

Onwards and upwards ....... there has and always will be one direction for the residential property market ...and that it will double every 7 -10 years - no questions asked.

Crazy Horse

For TTP (in his absence) .....................neighhhh !!!

https://www.newshub.co.nz/home/money/2021/05/house-prices-continue-recor...

All Data / News / Agencies suggest that house price are still jumping - touching new high still many in denial and not accepting that housing announcement and LVR is not having any meaningful effect even after two months and JUST BECAUSE - do not want Mr Orr to take further action, now are mentioning that waiting for market to cool..... Trying to influence to go for wait and watch.

Why the wait, when data suggest otherwise. This is what happens when people with vested biased interest are in charge to control the ponzi for FHB (Bonanza for Speculators) - conflict of interest.

Lots of first home buyers taking on million dollar mortgages. If rates go back to 5% then that's around $65,000 a year servicing costs on P&I for 30 years. That's a lot of money out of someones household budget. Question is now, will rates go up again and that high? Inflation looks to be coming in strong on a Global scale. Its looking more and more likely rates may go up.

They wont go up.

The central bankers perform their thievery through inflation and currency debasement.

As soon as they raise rates its game over.

Crypto is on special today...

Bitcoin is taking a hammering, where have all the Crypto spruikers gone ? Wait for tomorrow its going to be even cheaper. If house prices moved this fast I would be shitting my pants right now.

Shelter is a basic needs, crypto is not Carlos, your underwear is safe

Then why is shelter treated like a meme stock in NZ?

It's not, try living in your shares...

So fun to see housing spruikers criticize other people who do the same, how can you guys be even serious about what you do?

The period July - December was peak mania for Auckland

The average total sales for that 6m block in 2013-20 was 22,600
In 2020 it was 28,673
That is 26.8% over 8 year average for that 6m block

Then I looked at just June-August, which was 10.7% above average

The period Oct-Dec was what pushed the 6m period so much above average.
The 8 year average for that 3m block from 2013-20 was 11,192
in 2015 it was 10,547
In 2020 it was 15,103 (43% above 2015)
For July-Dec in 2020 was only 12% above 2015

Jan-March 2021 was BELOW 2015:

2021 = 10,141
2015 = 12,519

Then looked at Jan-March.
2020 was 10,044.
2021 was 10,141.
8 year average is 10,073 for 2013-20.
So, Jan-March was nil growth above the average.

This is a classic Gaussian bell curve with Oct-Dec at the top of the curve.

Timeline is, compared to 2015 prev high:

June-August 2020: -15%
July-Dec: +12%
Oct-Dec 2020: + 43%
Jan-Mar 2021: - 19%
March-April: - 30.8%

So, I anticipate further reversion to mean for rest of the year.
Price increases will also likely flatten so that annual rise will be nil by end of July or August.

March 2014 - February 2015 total Auckland sales were: 46,700
March 2020 - February 2021, total Auckland sales were: 45,601

At this point, only a negative OCR could allow AKL prices to achieve orbit. In any case, might want to chuck on a couple of seat belts.