November easily the busiest month of 2023 for auction activity

Property / news

More properties being auctioned but it's getting harder to achieve a sale under the hammer

9th Dec 23, 8:45am by Greg Ninness

November was easily the busiest month this year for residential auction activity around the country, although it's becoming harder to achieve a sale under the hammer.

March is usually the busiest month of the year for residential property sales, including those sold by auction. This year 1284 properties were offered at the auctions monitored by interest.co.nz in March. This was exceeded by the 1377 put under the hammer in October, and absolutely walloped by the 2250 properties offered up at the November auctions.

The number of auctioned properties selling under the hammer has also risen steadily in the latter part of this year, with the 427 sales in March exceeded by 489 in August, 506 in September, 628 in October and 918 in November.

However the increase in sales under the hammer mask a possible indicator of weakness in the market, which is that sales under the hammer have been increasing at a much slower rate than the number of properties being auctioned since September.

Back in March exactly a third of properties auctioned were sold under the hammer. That rate steadily increased to almost half (49%) in August and then dropped back to 41% in November.

That's still a better sales rate than at the beginning of the year, but the latest auction results suggest the sales rate could drop back under 40% in December.

That's resulting in a growing pile of properties to be sold by negotiation post-auction, a trend that can be clearly seen in the graph below.

We are hearing similar stories from the coalface, with agents reporting that although there are plenty of listings and plenty of potential buyers in the market, the main difficulty is closing the gap between their respective price expectations.

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60 Comments

by Yvil | 9th Dec 23, 8:50am 1702065009

The increased number of sales towards the end of this year is certainly not what expected, given the high interest rates.

by Davo36 | 9th Dec 23, 9:06am 1702066011

110,000 people coming into the country every year mate. If 10% of them can buy, that's 11,000 extra buyers right there.

Add to that other people are looking around and noticing that house prices aren't going down anymore, so no point waiting. In fact they might feel they need to buy before they start going up again.

by Nzdan | 9th Dec 23, 9:39am 1702067989

Yup, and we don't know what their household composition is either. Kiwis generally have 2 adult income workers on the mortgage.

Hypothetical: When migrants are given residency, what's stopping them from having multiple adults on the mortgage? 4 couples to a 4 bedroom house = up to 8 incomes per household. Still luxury compared to the living conditions they may have left.

by K.W. | 9th Dec 23, 11:41am 1702075277

They don't need to be on the mortgage. They just need to have boarders paying them rent.

by Nzdan | 9th Dec 23, 1:32pm 1702081964

No, they don't need to be on the mortgage. But much more likely to qualify for the loan if they're all on the document.

Pool their finances and smash the mortgage down. Take the equivalent mortgage payments from 3 houses, and apply against 1 mortgage, you end up with an 8 year loan.

by Yvil | 9th Dec 23, 1:38pm 1702082335

Hmmm it would be interesting how the banks see it. Would the banks give a mortgage to 2-3 families ltd buy a house to together ? I suppose they would all have to be on the title as co-owners and jointly and severally liable. Does anyone know the answer please ? (no "I reckons" please)

by Nzdan | 9th Dec 23, 2:54pm 1702086859

This article mentions potential difficulty convincing the bank it's a good idea. Also that they'd be tenants in common (part share in the house) but fully liable for the total mortgage.

https://www.settled.govt.nz/blog/should-i-buy-a-house-with-a-group-of-f…

by 1689 Baptist | 9th Dec 23, 1:56pm 1702083385

^{I have never understood kiwis reluctance to having boarders. It gives you far better gross yield than standalone rentals.}

by streetwise | 9th Dec 23, 4:36pm 1702093000

With the wife out working full time as well as the husband I suppose you think it ok for her to have to also cook more food for the boarder/s and expend more time and energy on the extra housework required by having an extra boarder/s. Or are you one of these patriarchal nutters who thinks the wife should do everything in the house whether she's working or not.

by 1689 Baptist | 9th Dec 23, 8:41pm 1702107669

I'm not sure why you are jumping to such outlandish assumptions. I have never had boarders who I cooked and cleaned for. I offered accommodation in exchange for a fee. I wasn't married when I started having boarders. Today I am married with kids and we have two boarders in sleepouts on our property. Not that any of thos really matters, but I work and my wife is a stay at home mum. I do most of the housework and cooking on account to my wife's disability. The boarders take care of themselves.

by GetFeeling | 10th Dec 23, 11:17am 1702160277

re ... "The boarders take care of themselves."

Then they are not boarders - they are flat mates.

IRD has different tax rules for the income. Take care you declare income from flat mates. And keep good records for income from boarders if you do not need to, or decide not to, declare it.

by Nzdan | 9th Dec 23, 6:21pm 1702099280

A good friend of mine bought his house 10 years ago. Has 2 kids. Still rents out any spare bedroom he's got.

I would do the same because it makes sense financially, but I just can't stand people.

by Flying high | 9th Dec 23, 9:25pm 1702110328

Most of the Indian immigrants I know also don't like sharing house so does that mean "they can't stand people" lol

by Nzdan | 10th Dec 23, 4:20pm 1702178421

Difference is many share the house out of necessity. We're perfectly comfortable with a 4 bedroom 2 bathroom house between 2 adults and a 6 year old.

by TronMVP | 11th Dec 23, 12:23am 1702207404

Nzdan, are you admitting to be a misanthrope?

by Pa1nter | 9th Dec 23, 9:59am 1702069195

Probably a safe assumption that the majority of sales going on at the moment involves buyers where finance isn't as much of an issue. Either lots of cash or a great income to expenses ratio.

Seems like certain properties are going quickly and the rest of the market is taking the 6-12 weeks it normally should to sell a house.

by Smudge02 | 9th Dec 23, 8:53am 1702065227

I guess with the property market it is always a case of expect the unexpected.

Observations around my neck of the woods I am seeing a lot of houses on the market and a lot of 'SOLD' signs. Went past an open home the other day and the street was full of cars. It seems where there is a will there is always a way?

by Dgm | 9th Dec 23, 9:03am 1702065806

The market has clearly lost momentum since the FBB was not removed as initially intended..

Going to be a very quiet summer for the housing market..agents might as well go on extended holiday

by Davo36 | 9th Dec 23, 9:07am 1702066072

Did you not read the article? Did you not see the graph at the end of the article? More sales than ever mate.

by Dgm | 9th Dec 23, 9:12am 1702066329

Did you read the entire article? Maybe you need to learn to read a chart

by Zwifter | 9th Dec 23, 9:18am 1702066694

You are a glass half empty kind of a guy. Plenty of listings and still plenty of sales.

by Pa1nter | 9th Dec 23, 10:01am 1702069264

It's good that dgm doesn't have any clearly stated metrics to gauge where the market is good, bad or otherwise.

Devise your position first then match the facts to it, not the other way round.

by danicriss | 9th Dec 23, 10:04am 1702069458

The graph in the article is a good enough metric. Blue = supply. Orange = demand. You do the math where this is going

by Pa1nter | 9th Dec 23, 11:06am 1702073167

Except it's only telling you that factor in an auction environment, which is a fairly constrained sample, given the requirements of having unconditional buyers.

by 1689 Baptist | 9th Dec 23, 2:31pm 1702085511

The graph only shows auctions. Total inventory (houses for sale) is actually dropping.

by Thats All Folks | 9th Dec 23, 9:24am 1702067083

It’s rather pathetic how myopic spruikers have become.

It’s like selling a used car knowing the customer will blow the engine 100km down the road.

Next year will be amusing.

by Pa1nter | 9th Dec 23, 10:02am 1702069322

Has it to happen at some point, but people have been saying this for a couple of years already.

Myopia all round.

by Yvil | 9th Dec 23, 10:15am 1702070136

That's all folks, are you sure you don't have some biais yourself? Let's just look at raw figures:

"427 sales in March exceeded by 489 in August, 506 in September, 628 in October and 918 in November"

That looks like a rising trend of sold houses, you can't deny that.

by agnostium | 9th Dec 23, 1:10pm 1702080640

That is consistent with the normal seasonal rise. Nothing special about this.

by Yvil | 9th Dec 23, 1:22pm 1702081371

.

by Yvil | 9th Dec 23, 1:22pm 1702081345

"That is consistent with the normal seasonal rise"

No it's NOT, March is the busiest time of the year, yet November had more thant twice as many sales.

March is usually the busiest month of the year for residential property sales

by HouseMouse | 9th Dec 23, 1:29pm 1702081791

More than twice of March THIS year. But remember March of this year was awful, a confluence of factors (including the floods).

The jury is still out on this market.

by TronMVP | 9th Dec 23, 9:35pm 1702110924

And to think that just a month ago certain people were saying "if you see green shoots in the market then you must have been smoking them".

Funny how you never see retractions of such statements.

by danicriss | 9th Dec 23, 10:01am 1702069287

All I see is a gaping hole between supply and demand. Which tracks, since the market's had record low listings for over a year

Couple that with a severe change in the ability to service a mortgage, record high prices relative to incomes* and a culture which is built on a false premise (everlasting growth of an asset value) and the next year's popcorn sales will be at all times high. House prices? Less so. House sales? Unsure, vendors still like it in Lala Land

* I know records were established late 2021, I'm looking at the big picture over a few years, not at week by week noise

by Yvil | 9th Dec 23, 11:30am 1702074637

"All I see is a gaping hole between supply and demand"

The graph compares supply (listings) and sales, which is NOT demand. Look at it this way, what happens to the increasing number of people who sell ? Do they sleep on the streets? No they will need to buy another house or at least rent one. As long as the population increases, the demand for housing, be it owned or rented, does NOT reduce.

by agnostium | 9th Dec 23, 1:11pm 1702080704

Sales = demand 100%.

What is your definition of demand? People who want stuff?

By that definition the demand for Ferraris must be through the roof.

by Yvil | 9th Dec 23, 1:26pm 1702081580

"Sales = demand 100%"

Sales is the point where demand meets supply at an agreed price.

by Yvil | 9th Dec 23, 1:28pm 1702081698

"Sales = demand 100%"

Also look at it this way so you can better understand it:

5 people walk into a bakery and want to buy a croissant each. There are only 3 croissants left. Demand = 5, sales = 3

by 1689 Baptist | 9th Dec 23, 2:42pm 1702086178

Sales = quantity demanded.

Don't want appear pedantic but it's not the same thing as demand.

Demand can grow even when quantity demanded remains the same.

by 1689 Baptist | 9th Dec 23, 2:39pm 1702085977

The gaping hole is closing. Housing inventory is decreasing. Every month more house are sold than come on to the market . This has significant regional variation though so you may be right depending on where you are based

by tothepoint | 9th Dec 23, 12:38pm 1702078697

If you think that's the situation, DGM, it would seem an opportune time for you to take an extended holiday as well....... 👍

Go enjoy yourself somewhere nice and we'll hear from you again towards the end of 2024 - or later if you wish. 😁

TTP

by Dgm | 9th Dec 23, 1:29pm 1702081750

Pity you're struggling to sell property.. crying won't help

by Averageman | 9th Dec 23, 9:30am 1702067410

Talking to a few agent friends, there is a deluge of listings lining up for 2024.

by Dgm | 9th Dec 23, 10:02am 1702069368

Has to be, people's wallets are running dry..many can't withstand the higher repayment and banks have already told households to find more cash next year

by Yvil | 9th Dec 23, 11:34am 1702074853

And what happens to "the deluge of people who are about to sell" ? Do they all sleep on the street after selling ? No they need to buy another house or rent one, thus increasing the demand by exactly as much, as them selling has increased supply.

by Averageman | 9th Dec 23, 11:51am 1702075876

They export themselves to West Island. Along with their future consumption, income and associated taxation. Also known as loose, loose, loose for NZ.

by Yvil | 9th Dec 23, 1:31pm 1702081873

Well, that would indeed reduce demand if NZ's population was reducing, but it's not. Read some of Interest's articles about immigration and NZ's population growth agnostium, you'll get a better understanding wether demand for housing, be it bought or rented, is reducing or increasing

by Sam Bridgman-Smith | 9th Dec 23, 1:00pm 1702080019

Anecdotally, I know of a number of homeowners who are looking for flatmates due to rising interest rates. If this happens en masse it should cool the rental market.

Interest rates are taking their toll, unemployment will rise. I can’t understand why many people religiously believe that house prices can only go up, unless they deliberately ignore history.

Hideously high house prices are not a new paradigm, it’s an monstrous bubble.

If I’m wrong then our children won’t have a future here.

by 1689 Baptist | 9th Dec 23, 2:45pm 1702086316

I had wondered if the pulling back of the brightside test would open the gate for landlords to exit the market. Ironically it might reduce house prices in the short term.

by Colin Cameron | 9th Dec 23, 10:35am 1702071357

But what percentage sold in total with the Auction have been told a lot are selling but after auction so a conditional agreement can be done. So the Auction was a success just not under the hammer

by agnostium | 9th Dec 23, 1:18pm 1702081119

by agnostium | 9th Dec 23, 1:19pm 1702081187

That doesn't make sense. The auction can't be a success if it didn't sell by auction. Greg publishes a different post where he summarises what has sold over the month irrespective of sales method. I think that showed that sales are back around 2019 levels. They have improved over the year but from a 12 year low so not particularly strong or weak. Prices are still very low compared to peak and if you take into account inflation they are still going backwards.

by Yvil | 9th Dec 23, 1:33pm 1702082023

Indeed!

by Nellbell | 9th Dec 23, 5:30pm 1702096219

Hmm conditional contract is not a sale. Most properties “under offer” in my area drag on for months and months as the purchaser can’t find a buyer for their house.

by Nzdan | 9th Dec 23, 6:24pm 1702099471

Wairarapa aye? I've mentioned on here in late 2021 when we traded up things were starting to stagnate. We had 3 offers on our deadline sale. 2 other properties nearby listed within a couple of weeks of our place going unconditional and ended up delisting.

The agent was in a chain of 7 conditional sales with FHB at the bottom of the heap. It all eventually went through as the FHB got finance.

by K.W. | 9th Dec 23, 11:47am 1702075656

Asian buyers are back baby! At an auction on Thurs of a 1960's brick home in its original state on a 673 sqm section with a CV of $630k, online estimated valuation of $680k, was on the market at $775k - sold for $920k

by HouseMouse | 9th Dec 23, 11:58am 1702076311

Were you at the auction, or watched online?

by HughJorgan | 9th Dec 23, 11:58am 1702076322

After reading the article and the comments where I land is that the chart says nothing. Unsold houses (the gap between the lines) is rising but the time series being YTD tells us nothing.

Let’s all agree this insufficient analysis and move on.

by HouseMouse | 9th Dec 23, 12:36pm 1702078617

Exactly.

I am a broken record - nothing for either spruikers or DGMs to get excited about.

by GetFeeling | 10th Dec 23, 11:23am 1702160580

Question: If one doesn't remove, or adjust, for the increasing supply of homes, are you comparing apples with oranges?