There has been a relatively restrained start to the summer selling season in the Auckland property market, with less than half the properties selling at the major Auckland auctions last week.
At auctions held by the region's biggest agency, Barfoot & Thompson, in the week ending December 11, clearance rates ranged from 31% to 65%, with most auctions achieving clearance rates below 50% (see table below).
The most successful auctions were those held on site of which 65% were sold, with the remainder either passed in, postponed or withdrawn from sale.
An auction of mainly west Auckland properties located in suburbs traditionally popular with investors such as Massey and Glen Eden, also achieved a 65% clearance rate.
On the North Shore, where auctions have been particularly subdued over the last few weeks, Barfoots achieved a 36% success rate at their auction at the Bruce Mason Centre, while Harcourts Cooper & Co who are major players on the North Shore, achieved a 45% sales rate at their auction last week, following a 47% success rate the previous week.
| Barfoot & Thompson Auctions Week ending December 11 | ||||
| Venue | Date | Number sold | Passed-in, withdrawn or postponed |
Clearance rate |
| On site | 7-13 Dec | 19 | 10 | 65% |
| Manukau Sports Bowl | 8 Dec | 13 | 17 | 43% |
| Shortland St, CBD | 9 Dec | 18 | 31 | 37% |
| Whangarei | 9 Dec | 3 | 2 | 60% |
| Bruce Mason Centre North Shore | 10 Dec | 16 | 29 | 36% |
| Shortland St, CBD | 10 Dec | 4 | 9 | 31% |
| Pukekohe Raceway | 10 Dec | 4 | 6 | 40% |
| Shortland St, CBD | 11 Dec | 11 | 6 | 65% |
| Harcourts Cooper & Co. North Shore Auctions - December 1-13 | ||||
| Venue | Date | Number sold | Passed-in, withdrawn or postponed |
Clearance rate |
| North Shore | Dec 1-6 | 22 | 25 | 47% |
| North Shore | Dec 7-13 | 14 | 17 | 45% |
29 Comments
The scary thing is whether or not the house is now worth $670k. Why would you buy such an expensive item when the market is moving backwards? My niece who is currently selling in Auckland has told us the market has definitely changed. Why is anyone buying at all? Surely there is a good chance now that you will buy something cheaper if you are patient. Paying your landlord his measly 2 to 3% return could save you tens of thousands in what you have to borrow in the future. And you pay interest on those borrowed funds, some of which could disappear down a big black hole.
unfortunately my friend just bought his first house 2 days ago. A piece of s.. bungalow in Glen Eden for nearly $600,000k
No matter how much I tried to put some sense into his head for the last months. At the end the obsession for home ownership won.
Biggest mistake of his life if you ask me..
I feel sorry for the first home buyers who think now it's a "good time to buy" because of the market's slowdown and I feel disgusted about those who encourage them to do so (their families gave them some money and everybody is congratulating them not sure why..)
Crazy times
Yes I think it is very wise to 'wait and see' just how much the housing market is going to drop by. I estimate 20% for Auckland and much further everywhere else.
In case you haven't noticed the big elephant in the room that has put off foreign investors, is CGT (Capital Gains Tax), which was introduced in October at a whopping 33%!! on rental property gains, this is one of the highest rates.
If you take a look around the world; there are countries that don't charge any CGT on property sales and one of these happens to be one of your biggest property investors (i.e China or at least Hong Kong).
The IRD requirement is a small hurdle in comparison to CGT, and on its introduction; hey presto the property market has taken a downturn, suddenly switching from Auction, Auction, Auction. To priced (Thankfully - though still over inflated prices.
I'm still shocked that you didn't have the IRD requirement before or any perspective on the amount of foreign investment going on, so it's not surprising that the property market has been running out of control. At least now it is good to see the heat is being taken out of the property market here and that you've finally recognized that other parts of the world have been buying up NZ wholesale.
Otherwise you'll become tenants in your own land. :(
Muntijaqi, I notice that you haven't responded to any of the responses to your rant on rent vs own. On the place you rent in Tauranga, how much is the value of it up in the last 12 months? Why don't you calculate the return on your money of 3.5% less tax at the marginal rate vs a capital gain multiplied 5-10x by the leverage involved. It is a no brainer to buy anywhere outside of Auckland right now. Very dangerous advice to tell someone not to buy, only ever been brief periods where that has worked out better than buying. Shamubeel and co should make a public apology for all the people who followed his 'advice'. Truth of the matter is, he doesn't know what is going to happen in the future. The maths stacks up on owning far better than renting when everything is taken into account, this is why prices have gone up so much over time. There are plenty of people who made plenty from property, and almost no one who got rich from investing their money into a bank at the prevailing interest rate.
There are plenty of people who have lost everything speculating in property. They don't tend to broadcast their stories in the media or at BBQs. Trust you've had a look at the US, Irish and Spanish markets and what happened there (and concluded it couldn't happen in NZ).
What is it that makes you so certain property will continue to experience such big capital gains in NZ? Give us some analysis.
Two things. The gains don't need to be nearly as large to provide a very good return over time. Second, I'm not certain but a number of reasons give me a fair degree of confidence. Inflation. The fact the super fund just invested in auckland property - they are good operators. The fact the government will do anything to keep prices rises. Huge and increasing amounts of capital washing around the world looking for a safe return. Could we get a large downturn in prices? Sure it is possible, people are playing with a lot of leverage. But I highly doubt it. If prices fell 50% then investors would rush in based on the yield available vs cost of financing. It would have to be coupled with a massive increase in supply and rents falling fast, economic stagnation, increasing interest rates and no immigration. Yeah this might happen but in the history of the world the optimists have always won out. It's kind of like the guy who bought some Berkshire at 40 dollars and thought he will buy some more once the price gets back to 35. Sometime later he ended up buying more at 20000 per share. If you bought 2/3 years ago in akld you are now so far ahead that it doesn't matter if prices fall heavily - you will still have an adequate return and a place to call home. yes I'm familiar with what happened in the us, it is effectively a blip on the ocean of property price rises around the world which has been going on for decades. In fact I'm sure many investors in good locations in the us - San fran etc, have done well as prices have recovered and continued to rise.
Indeed the 20 somethings will be saddled with massive debt, climate change, high un-employment, and a post peak oil world and you think they'll be worried by make believe printing?
Do you really believe "printing" will fix the above anyway? I guess as a financial type you do, a nasty shock awaits you IMHO (well all of us but a few expect it).
If prices do decline how does throwing more $s at it fix it?
It doesn't.
That'd be like assuming that the problem for prices to decline is a restriction in the monetary supply. As seen recently in the whole world the problem is not the amount of money but the lack of real non-debt based growth.
And let's not forget that debt can be paid ..or not.
"the lack of real non-debt based growth."
exactly.
"can be paid ..or not"
Indeed and if you consider money as an IOU for work/energy and if like me you look at the imminent decline of oil output and what that will do to GDP (ie within 5 years) then its the "or not" IMHO.
If you want house to live buy. If you want decent return on investment with limited risk and comfortable retirement life invest in property. If you want to live in a rented house for life and live under hand to mouth situation, don't buy or invest in property. Happy sulking!
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