With buyers in control, the final week of residential auctions was an uncomfortable one for many sellers

Property / news

The final week of residential auctions was busier than is usual for the week before Christmas, but the sales rate stayed low as did the prices achieved

23rd Dec 23, 6:00am by David Chaston

Although the last week of residential property auctions featured less than half the volume of the prior week, as expected, the sales rate did shift up slightly, with 36% of the 211 properties offered at the auctions monitored by interest.co.nz in the week of 16-22 December selling.

That is up from a record low 32% in the prior week.

However, it is unlikely that most vendors would have been very happy with the results. Only 26 of the 77 that sold achieved rating valuation or better, a lowish 34% and well down on the 50% level at the prior week.

The prior week achieved the lowest sales rate of the year at 32%, so this week's 36% rate isn't a notable gain or achievement. Along with the very low levels of sold properties reaching rating valuations, it is safe to conclude that the year has finished on a soft note even if the volume of auctions is actually quite robust for this final week.

Yes, properties are selling, but mostly when vendors are prepared to meet the market, a market being driven by the lower offers being made by bidders.

But what is very notable is how well residential auctions are doing in Christchurch. Two in every three are selling in that market and almost 60% of them are going for better than rating value. It is an island of positivity for auctions.

Residential real estate auction activity will return mid-January and we will have our continuing coverage.

The table below shows the district by district results from the latest monitored auctions around the country.

Details of the individual properties offered at all of the auctions we monitor, including the selling prices of those that sold, are available on our Residential Auction Results page.

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59 Comments

by JimboJones | 23rd Dec 23, 7:16am 1703268973

So it looks like price (including interest) is more important than increased demand (immigration). It’s hard to pick what will happen next year, interest rates will come down but house prices will still be unaffordable.

by Dgm | 23rd Dec 23, 7:35am 1703270102

This trend will continue next year.. ELE is a sign of things to come..

As JJ said above, housing is very unaffordable

by Blackdog | 23rd Dec 23, 7:39am 1703270391

Looks like a flight from Auckland, gone to Aussie?

by Dgm | 23rd Dec 23, 7:41am 1703270460

And to the regions

by nktokyo | 23rd Dec 23, 7:49am 1703270969

Why would you sell at auction in a slump?

by Averageman | 23rd Dec 23, 8:23am 1703273026

Because the idiot boom at 2% was fake. Smart money exited then.

by Flying high | 23rd Dec 23, 8:48am 1703274507

How's your property hunt, are the sellers folding or holding out on your 'grab myself a steal' pricing

by Averageman | 23rd Dec 23, 8:57am 1703275058

Recent cash offer was declined due to seller not actually being ready to sell. So back to price by speculation. Watches several auctions just for interest. Both received multi million bids but declined to sell so greed still running strong.The volume if listings is growing. People are even listing in the last two days which says something.

That said more focused on cake and vino for the next month or so.

by Flying high | 23rd Dec 23, 9:33am 1703277212

Your 'cash' offer really means less cash offer. They arent desperate and do not need to accept it.

Enjoy the vino and the cake but keep checking the property listings to find another that suits

by Zwifter | 23rd Dec 23, 11:01am 1703282490

Very hard to find a real bargain, only saw one go after 12 months looking and following up on sold prices. You have to be prepared to waste a lot of time looking and putting in offers which is fine if its just a rental but if you are looking for your forever home its not going to happen, the RE is never going to tell you the vendor is on the ropes.

by GetFeeling | 23rd Dec 23, 12:28pm 1703287717

re .. "Very hard to find a real bargain..."

That depends on your definition of 'bargain'. I put two builder friends onto two Auckland properties. They thought every developer in town would be bidding up the prices. But they went along to the auctions anyway. A few naive 'investors' (buying the house) were their only competition. They both bought for bargain prices and said thanks in the nicest way.

by 26@Main | 23rd Dec 23, 4:43pm 1703303007

the RE is never going to tell you the vendor is on the ropes.

Why not? REAs want a sale and their commission, especially when there are a lot of listings. We've been told the personal reasons why vendors wanted to sell on two properties we've bought. One of those times we were able to verify what the agent said via social media and we put in a low offer accordingly and it was accepted. Perhaps it's different when there aren't a lot of properties for sale, but that's not the situation now.

by tothepoint | 24th Dec 23, 7:30am 1703356241

Talking of "being on the ropes", any speculation on Parker vs Wilder today??

TTP

by IT GUY | 24th Dec 23, 10:45am 1703367922

I think Wilder will knock him out in 2nd half of fight

by Rhumline | 24th Dec 23, 12:44pm 1703375083

Your predictions..... are entertaining. Well fought JP!

by IT GUY | 24th Dec 23, 4:02pm 1703386923

Well done Joe

by Rhumline | 24th Dec 23, 1:18pm 1703377091

by Nellbell | 24th Dec 23, 1:37pm 1703378220

I assume that at some level everyone listing has to sell, otherwise who would list at the moment. But I guess some vendors have a higher motivation than others

by Thats All Folks | 23rd Dec 23, 9:22am 1703276546

The thing is, buyers have the luxury of time and indifference at this juncture.

Vendors don’t.

So they can stubbornly hold off today, but their neighbour tomorrow, perhaps not so much.

🍿

by CN - new | 23rd Dec 23, 5:41pm 1703306505

"The thing is, buyers have the luxury of time and indifference"

Buyers always have that choice. However that choice is heavily influenced by price expectations of buyers.

In an environment of upward price expectations, at extremes, buyers can go into FOMO. Owner occupier buyers compete with non owner occupier buyers (property investors recycling equity, property traders, property developers, property buying syndicates, etc) at auctions. This is how prices rose to the extremely elevated risk levels in Nov 2021. These are conditions known as a sellers market.

In an environment of flat or falling price expectations, buyers may choose to wait for lower prices, or make low ball offers to time constrained sellers. Under certain conditions, there may be an increase in time constrained sellers relative to the number of active buyers. These are conditions known as a buyers market.

by Baywatch | 23rd Dec 23, 8:37am 1703273825

Cause you can't afford the mortgage payments and need to eat.

by nigelh | 23rd Dec 23, 8:12am 1703272358

https://www.newshub.co.nz/home/money/2023/12/auckland-woman-s-warning-to-homeowners-after-losing-property-in-mortgagee-sale.html

Another person thinking the bank is a benevolent society. I wonder how many others are in a similar position? Quite possibly living at a reduced "rent" for some time so was aware that she'd loose the property eventually.

by Black and White | 23rd Dec 23, 8:22am 1703272949

This is just the start of mortgagee sales.

The other part of this banking Cartels bad behaviour is they are using third party operators to deal with them so it don't affect their cartel behaviour more.

Hopefully the NZ first government and Winston get onto this.

by Rampart | 23rd Dec 23, 8:28am 1703273300

Agreed. 2024 will be the year of mortgagee sales. A reduction in mortgage rates from 7.3% to 6.7% is of no use to mortgage holders refinancing from somewhere in the 4% range. Especially those who got caught up in the hype of the covid property bubble.

by TronMVP | 23rd Dec 23, 9:20am 1703276435

See the date on the article is July 2022, and her interest rate had gone up to 8.64%. It would be useful to see some up to date data, rather than an anecdote from 1 year and 4 months ago.

by Yankiwi | 24th Dec 23, 3:24pm 1703384685

Well, July 2023 so four months ago.

The bank was remarkably restrained considering that no payments had been made for more than two years. If you cease making payments on your mortgage, expect to get evicted.

by Dgm | 23rd Dec 23, 11:28am 1703284124

The global job market is now retreating, that will add to that conundrum

by Baywatch | 23rd Dec 23, 8:39am 1703273983

Hopefully the NZ first government and Winston get onto this.🤣yes I'm sure it will be their major priority when they get back to work in late Feb😭

by John Mendel | 25th Dec 23, 9:48pm 1703494089

In your dreams, 80% of the buyers are already at 7%. Two weeks ago I was part of a mortgagee sale, sold 7% under CV

by Averageman | 23rd Dec 23, 8:33am 1703273637

Indeed. Miss your mortgage payment for two and a half years and reality happens. I'm just amazed the bank took so long to get there. Shows have desperate the banks are to keep the ponzi afloat.

How much more payment delinquency is being masked by the banks...?

by CN - new | 23rd Dec 23, 6:22pm 1703308967

"I'm just amazed the bank took so long to get there. "

Does seem like a long time.

Perhaps due to responsible lending rules?

There are 19,200 mortgages in arrears currently. What will lenders do?

by HGWR | 24th Dec 23, 3:38am 1703342283

Absurd, isn't it? Imagine a renter who didn't pay for that long! Allowing more unpaid interest to continue piling up for two and a half years seems impossible to justify on grounds of responsibility, the policies that allow this leeway are blatant systemic manipulation of the market to prop up the ponzi. Ultimately, this is to prolong the siphoning off of ever greater shares of our productive output for consumption by bankers, shareholders and other topfeeding scum. Morally it is theft, on a grand scale. Sadly our politicians and lawyers will do nothing, since most of them are beneficiaries of the scam.

by TronMVP | 23rd Dec 23, 10:37am 1703281068

This article is a classic "news article" from Newshub. Originally produced in July 2022, released again sometime in 2023, and then a third release today! Please Newshub, stick to reporting news.

by charlieandme | 23rd Dec 23, 10:16am 1703279800

I was dumb - I still have my property - sure it is freehold but what a bonza run the NZ residential property market had and a sell signal if ever there was one

A my property value sinks I ponder a sale but don't act. I feel inept with non-sellers regret - sellers regret too as I sold the rental too early

Where to from here? Not a clue other than a big market blowout takes years to adjust so at best a hammering in real terms will continue

by Flying high | 23rd Dec 23, 11:59am 1703285944

non-sellers regret - sellers regret too

Give yourself a break, its probably quite hard to time the market to perfection.

by IT GUY | 23rd Dec 23, 1:58pm 1703293131

Yeah its what makes a great trader vs an average joe, as many great traders say, they would rather be lucky then good.

by CN - new | 28th Dec 23, 2:47pm 1703728066

"what a bonza run the NZ residential property market had and a sell signal if ever there was one"

Most people couldn't see it at the time.

This is what some some commenters were saying at the peak of elevated house price risks on interest.co.nz

a) 9th Nov 21, 2:38pm

"I have always looked at this from the opposing direction - the risk in not owning a property? If you do not own a property you are short, not even square, but short"

b) 9th Nov 21, 5:52pm

"Or maybe right the opposite, don't hesitate, be brave and go for it, you'll be fine"

c) 23rd Nov 21, 8:52am

"It makes absolutely no sense for a couple like this to bank a capital gain now rather than wait two years and avoid 90k in taxes. The market is not going to crash 10% in the next two years."

d) 9th Nov 21, 2:38pm

"locally, I can not see anything in the near future that would decrease these current values."

f) 14th Oct 21, 11:25am

Shrewd investors will capitalise on perceived price weakness - cementing their position for the next market upswing. Well located property remains a prime investment for the long term. (But you already know that.)

What were property commentators (and potential vested financial self interests) saying at or just after the peak?

1) Tony Alexander - 19 reasons why there's no crash - December 2021

https://ndhadeliver.natlib.govt.nz/delivery/DeliveryManagerServlet?dps_…

2) Catherine Masters - July 2022

Why the New Zealand housing market is nowhere near crash point

https://www.oneroof.co.nz/news/why-the-new-zealand-housing-market-is-no…

3) Ashley Church - April 2022

Four reasons the housing market won't crash

https://www.oneroof.co.nz/news/ashley-church-four-reasons-the-housing-m…

4) Kelvin Davidson - Dec 2021

“But will prices actually fall? I’m not convinced because in the past a serious housing downturn has come with a recession, but no one is suggesting that and unemployment is low at 3.4 per cent.”

https://www.stuff.co.nz/life-style/homed/real-estate/127305870/what-lie…

5) Nov 2021 - Here's why it might be fruitless to pin your hopes on a house price crash

https://www.stuff.co.nz/business/300449314/heres-why-it-might-be-fruitl…

by GetFeeling | 23rd Dec 23, 12:19pm 1703287190

Canterbury has a broad based economy and the return of tourism makes it a likely that's it'll return to its days of being a growth center at par or above our other main centers.

The other factor at play is ChCh City Council's insistence in returning to the 'bad old days' where Council (elected by NIMBYs and property owners) returns to restricting dwelling supply through outdated zoning rules that promote spread, low density housing, car use and house price appreciation for the already 'landed'.

by IT GUY | 23rd Dec 23, 2:10pm 1703293825

Yes, properties are selling, but mostly when vendors are prepared to meet the market, a market being driven by the lower offers being made by bidders.

Offers being limited by banks lending limits and test rates of 9-9.5% may do this.... more to come as listings increase... not many bother listing if they do not want or need to sell, its going to become a race to sell as the market drifts lower in 2024, sure rates may drop slightly but unemployment will rise.

Remember the best day to sell was YESTERDAY.

by Zwifter | 23rd Dec 23, 2:51pm 1703296273

I think you mean the best day to buy was yesterday. The slightest sniff that the OCR is going to fall and away it all goes again. All depends on how long the RBNZ will stay in a holding pattern now.

by Flying high | 23rd Dec 23, 2:58pm 1703296684

The best time was a few months ago, but we probably have years left before the next peak. I'll be spending the break surfing the property listings when not surfing the waves

by IT GUY | 23rd Dec 23, 4:20pm 1703301650

There are more people who want to buy now 12/23 than last year but cannot afford whats the vendor is asking..... banks will not extend credit to that level

In this market sales have to move to the bid , and they will. Its what we are seeing on the ground.

Maybe there are 20-33% of recent listing just trying to see if they can get silly money.... the numbers not selling seem to indicate this..... this maybe up to 1/3rd of the market do not need to sell... which leaves 2/3rds more realistic or desperate.

I think current sales reflects this smaller market. I think average prices will step lower in 2024 but some will be composition. lower priced houses may well have more motivated vendors to sell. There will be more actual buyers matching this segment in 2024.

by Thats All Folks | 23rd Dec 23, 8:34pm 1703316880

https://tenor.com/uXYk.gif

by CN - new | 24th Dec 23, 5:22am 1703348566

"I've never seen house prices in Auckland fall 20%. That's a bubble" - previously high profile property investor and property developer in NZ.

When a property market participant and insider says its a bubble, that really has some significance.

by CN - new | 23rd Dec 23, 8:41pm 1703317308

Meanwhile this is what some some commenters were saying at the peak of elevated house price risks on interest.co.nz

a) 9th Nov 21, 2:38pm

"I have always looked at this from the opposing direction - the risk in not owning a property? If you do not own a property you are short, not even square, but short"

b) 9th Nov 21, 5:52pm

"Or maybe right the opposite, don't hesitate, be brave and go for it, you'll be fine"

c) 23rd Nov 21, 8:52am

"It makes absolutely no sense for a couple like this to bank a capital gain now rather than wait two years and avoid 90k in taxes. The market is not going to crash 10% in the next two years."

d) 9th Nov 21, 2:38pm

"locally, I can not see anything in the near future that would decrease these current values."

f) 14th Oct 21, 11:25am

These commenters caused potential real damage with their advice - there are many buyers in the 2021-2022 who are under cashflow stress, and mental stress. Many will be unable to hold on and be under pressure to sell.

by CN - new | 23rd Dec 23, 11:05pm 1703325922

What has been the financial cost of following that advice that those commentators don't tell you about?

Here are some financial calculations for owner occupier buyers to think about. The Peaker and Buyer Today.

How does this compare with a Peaker and a Buyer Today (BT) in NZ? (Assuming that the Peaker can hold on and is not under cashflow stress to sell.)

1) Peaker

The median house price at the peak for Auckland was $1,300,000

With an 80% LVR, this is a mortgage of $1,040,000

The 20% equity is $260,000

2) Buyer Today ("BT")

In 2021, the buyer who waited, deposited the same $260,000 equity into a bank deposit earning interest. Also BT would rent an equivalent house and have still saved money due to the rental being below the monthly P&I mortgage payments of Peaker - in 2 years the savings would have been about $20,000 annually. So a Buyer Today would have an amount of $319,349 to use as a deposit.

The current median house price for Auckland is $1,040,000

Equity deposit of $319,349

The mortgage at this purchase price would be $720,651 (an LVR of 69%)

The Peaker has a mortgage which is higher by $319,349 (mortgage of $1,040,000 for Peaker vs $720,651 for BT)

Assuming BT, pays the same exact dollar amount each year that Peaker pays for their mortgage, as a result of that additional borrowing, Peaker is paying $856,632 more over the 30 years than BT (This is due to higher borrowing amount of $319,349, and total interest on this of $537,283 over 30 years). BT is mortgage free by the year 2042, whilst Peaker continues to pay their mortgage until 2051 (9 years later) - so after the year 2042, BT can save all that money that Peaker continues to pay on the P&I mortgage.

Assuming same incomes, and same living costs (food, travel, etc except mortgage) , BT can save the $856,632 in payments that Peaker is paying.

Remember that at the end of 30 years, the house price will be EXACTLY THE SAME for Peaker and BT.

BT will have more money available for retirement than Peaker. Conversely, Peaker will have less money than BT at retirement.

That single decision to buy in November 2021 would have cost $856,632 extra to buy the exact same house for Peaker compared to a Buyer Today.

by CN - new | 23rd Dec 23, 11:06pm 1703325980

What is the collateral damage of that advice for an interest only investor?

Note that the median house price today of 1,040,000.

If Peaker was on an interest only loan - then all of Peaker's equity has evaporated in 2 years.

Median House price: 1,040,000

Mortgage balance: 1,040,000

Equity is ZERO

Loss of 100% of equity deposit which may have been their entire lifetime savings.

by CN - new | 24th Dec 23, 4:03pm 1703387007

Appropriate to requote this comment here, assuming the highly leveraged owner occupier buyer can hold on. If they're under cashflow stress and need to sell, it could mean the loss of a significant chunk of their entire life savings. Some will lose more than their entire life savings due to being in negative equity. Some people don't realise this is going on.

"a big market blowout takes years to adjust so at best a hammering in real terms will continue"

by IT GUY | 24th Dec 23, 5:19pm 1703391598

2024 will be a year of horrendous stories in the media re RE

by CN - new | 27th Dec 23, 6:00pm 1703653209

"a big market blowout takes years to adjust so at best a hammering in real terms will continue"

What the property promoters with vested financial self interests are unlikely to tell you.

Another common line of reasoning is buy property as the mortgage erodes with inflation.

https://www.oneroof.co.nz/news/can-rising-inflation-magic-away-your-mor…

So how has that worked out as at November 2023 for a property owner who bought a median priced house in Auckland at the peak using an 80% LVR?

1) Median house price in Auckland has fallen 19.1% in nominal terms

A) November 2021

House price: 1,300,000

Mortgage (at 80% LVR): 1,040,000

Equity: 260,000

B) November 2023

i) Nominal terms

House price: 1,052,000 (-19.1%)

Mortgage: 1,040,000 (deemed to be interest only for simplicity and comparison)

Equity: 12,000 (-95.4%)

2) Inflation adjusted values using a deflator or 1.12 as per RBNZ for corresponding period

https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/inflatio…

House price: 939,286 (-27.7% from original price)

Mortgage: 928,571 (-10.7%)

Equity: 10,714 (-95.9% from original equity)

That fall in inflation adjusted equity value is a significant erosion of purchasing power.

Which would a person prefer?

1) pay 10-20% higher rent or

2) lose 95% of their equity used as a deposit

Also note: an owner who owned their property mortgage free experienced a 27.7% erosion of their purchasing power due to the inflation adjusted change in the market price of their property.

by CN - new | 23rd Dec 23, 11:12pm 1703326351

Some of these people followed that advice. This is the situation that has resulted from buying when house price risks were elevated:

1) May 2022 - https://www.nzherald.co.nz/nz/waiting-for-the-guillotine-to-fall-how-in…

2) July 2022 - https://www.oneroof.co.nz/news/homeowners-scramble-for-interest-only-li…

3) Nov 2022 - https://www.stuff.co.nz/business/130353910/no-money-in-negative-equity-…

4) Jan 2023 - https://www.nzherald.co.nz/bay-of-plenty-times/news/homeowners-scared-a…

5) Feb 2023 - https://www.nzherald.co.nz/business/mortgage-shock-900fortnight-rise-fo…

6) May 2023 - https://www.nzherald.co.nz/kahu/peak-ocr-pain-auckland-couple-working-f…

7) May 2023 - https://www.oneroof.co.nz/news/latest-news/interest-rate-pain-banks-urg…

😎 July 2023 - https://www.oneroof.co.nz/news/they-dont-know-how-theyll-afford-it-home…

9) July 2023 https://www.oneroof.co.nz/news/desperate-homeowners-turning-to-third-ti…

10) July 2023 - https://www.stuff.co.nz/business/property/132483897/mortgage-rate-pain-…

11) Nov 2023 - https://www.oneroof.co.nz/news/refix-terror-homeowner-has-to-stump-up-a…

Many will simply be unable to maintain their higher mortgage payments as they renew their mortgage interest rate. Those that followed the advice of some commenters and bought in the 2021 - 2022 period using high amounts of leverage are going to lose a significant chunk of their equity, for some it could be their entire life savings. Some will be in negative equity and will owe money to their lender even after the residential property has been sold.

There will also be the non financial costs, the impact on their mental health. Unfortunately some may choose to resort to self harm.

by CN - new | 23rd Dec 23, 11:00pm 1703325641

What were property commentators (and potential vested financial self interests) saying at or just after the peak?

1) Tony Alexander - 19 reasons why there's no crash - December 2021

https://ndhadeliver.natlib.govt.nz/delivery/DeliveryManagerServlet?dps_…

2) Catherine Masters - July 2022

Why the New Zealand housing market is nowhere near crash point

https://www.oneroof.co.nz/news/why-the-new-zealand-housing-market-is-no…

3) Ashley Church - April 2022

Four reasons the housing market won't crash

https://www.oneroof.co.nz/news/ashley-church-four-reasons-the-housing-m…

4) Kelvin Davidson - Dec 2021

“But will prices actually fall? I’m not convinced because in the past a serious housing downturn has come with a recession, but no one is suggesting that and unemployment is low at 3.4 per cent.”

https://www.stuff.co.nz/life-style/homed/real-estate/127305870/what-lie…

5) Nov 2021 - Here's why it might be fruitless to pin your hopes on a house price crash

https://www.stuff.co.nz/business/300449314/heres-why-it-might-be-fruitl…

by Averageman | 24th Dec 23, 11:25am 1703370310

View anything from these examples as PROPaganda.

by CN - new | 24th Dec 23, 1:18pm 1703377133

The general public, especially owner occupier buyers, need to be constantly reminded of those property promoters who are operating with vested financial self interests and who pose as "independent experts".

"Fool me once, shame on me. Fool me twice, shame on you"

Caveat emptor.

by Zachary Smith | 24th Dec 23, 12:37pm 1703374664

Very few mortgagee sales currently. Perhaps because it is Christmas.

by IT GUY | 24th Dec 23, 1:00pm 1703376056

I think there is a higher standard now to try and help people through, but eventually time runs out in 2024....

by John Mendel | 25th Dec 23, 9:37pm 1703493434

What happens in Australia will happen in New Zealand. Not enough houses and people who can't afford to pay rent/buy a house, will live outside.

If the house market is sick, why so many here want to get into it?!?!?!?!?!?!?!

by IT GUY | 26th Dec 23, 7:31pm 1703572266

Fair average people want to be able to afford to buy a fair average house to raise their children and live in old age, not to much to ask was it? Its sick because they can no longer afford to buy unless they feature in a news paper article or have people to help with the deposit..... maybe we should start to trade food, if poor people could not afford it so be it.......

by Flying high | 27th Dec 23, 12:35am 1703590506

Its the numbskull local body green politicians mostly to blame for restricting land supply in Auckland and elsewhere and zoning heritage in inner city suburbs

Once house prices inflate they don't come back anywhere near to the starting point. Its criminal when rents go up, tenants can't save the 20 percent deposit.