The auction sales rate is slightly lower for properties in Auckland than the rest of the country

The auction sales rate is slightly lower for properties in Auckland than the rest of the country
Photo: Samuel Mann

Sales were achieved on just over a third of the nationwide properties offered at auctions monitored by interest.co.nz last week (10-16 November).

We monitored the auctions of 301 residential properties last week and sales were achieved on 104 of them (35%).

We were able to match selling prices with the rating valuations (RVs) on 87 of the properties that sold, and this showed 64 sold for more than their RV, 22 sold for less than their RV and one sold for the same as its RV.

Auckland continues to dominate the auction market. We monitored 222 auctions within the region with sales achieved on 67 of those properties, giving a sales clearance rate of 30% for Auckland, just below the national average.

We were able to match up selling prices with RVs on 50 of the Auckland sales and of those, 33 sold for more than their RV, 16 sold for less than their RV and one was equal to its RV.

Overall this suggests the housing market remains relatively steady, although with plenty of listings available buyers are being very picky.

That means auctioneers and sales people often have their work cut out for them getting properties across the line at auctions.

It also means auctions are tending to take longer, with auctioneers often delaying dropping the hammer while negotiations take place between the highest bidder and the vendor, to try and secure a sale under the hammer.

Often the difference between the price buyers are prepared to pay and the price vendors are prepared to accept is just a few thousand dollars, so it is not uncommon for properties to be passed in and then sold shortly afterwards as post sale negotiations get down to the nitty gritty.

However in the current market properties that are not up to scratch are likely to be quite strongly discounted by buyers.

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

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I saw a house last week that was pulled from auction a week before the auction. When asked why we were told that the wrong sort of person was coming through????? Really? Even now, they still want too much for it but it will be interesting to follow through the system.

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Surely they mean white people. Not enough rich Chinese?

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Not sure what these poor real estate agents are going to do when they have to actually work for their money, and not just look for the "right people" coming to open homes and only talking to them.

I think the REINZ data is going to show that November prices are relatively steady compared to this time last year. Nov 2017 was a bit of a peak, so maybe slightly down, but basically flat as a slightly wonky pancake. The gloomies are going to need to get creative with their excuses as to why the foreign buyer ban didn't cause the market to implode. They are very good at mental gymnastics though, so this shouldn't be a problem.

E.g. The marginal buyer effect takes a while to bed in! Volumes were so low! Look at this one I cherrypicked - way below CV!

Auction sales rate of a third is all fine, right? Steady as she goes, with 70% not selling on the day. That's very dismal.

This is only the sales rate for auctions, not overall sales. And yes, price appears to be steady as she goes. Vendors have no reason to sell for cheap and buyers that aren’t prepared to meet current price expectations are missing out. Will stay that way until some sort of economic change puts more vendors in a position where they are forced to sell.

Crikey, 9 Coquille Place ,Half Moon Bay, sold for 2.16M over RV. It's not a rebuild either. Last sold in 2005 for 910k, now 4.21M. What's going on there?

https://harcourts.co.nz/Property/863498/HO2674/9-Coquille-Place

Why would someone buy that for even $2M

I can't see any house in the picture worth $2m or $4m. Where's the expensive house?

I think they just paid $3 million for the view! A fool and his money are soon parted!

I don't think money launders worry much about picturesque views.

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Go to https://nz.hougarden.com. Listings still strong. Now why would some one list on that site knowing the FBB is in place? Something smells fishy to me

Also use google translate otherwise you're stuck

Could it be they just use a trust?

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Are auctions simply a device used by Real Estate agents to make vendors come to their senses about what their properties are really worth?
The clearance rates are so low, its difficult to understand why anyone would use them.

Certainly one of the things agents like about them.

They get coached in dialogues like: "We have brought you the market and the market is saying the house would sell for ..."

The evidence is solidifying.......

The so-called Overseas Buyer Ban is not having the impact that a number of people here so enthusiastically anticipated.

There has been no dramatic fall in sales volumes - and prices are holding firm.

Steady as she goes......

TTP

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Really? It is having exactly the impact I expected. Auction clearance rates have dropped, unsold volumes are building. Panning out pretty much bang on expectations. Keep watching, no rush, good things take time.

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“and prices are holding firm”.

Except for the 70% or thereabouts that aren’t selling?

There's a hell of a lot more going on than the fbb. Why anyone would buy there first home at this stage of the cycle is beyond me. You'd have to have rocks in your head.....or perhaps just read the herald for advice.

I've got to acknowledge your positive attitude, at this point your could look at a dog turd and say "look a peanut, definitely edible!"

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I got this in a news letter from Barfoot Thompson

Just this week we have had massive training on the new Anti Money Laundering law, which encompasses Countering Financing of Terrorism

This law (s) comes into effect 1.1.19 and will involve an A - Z Due Diligence Process for Vendors, 6 pages long, requiring copies of Passports of all people on the Title/Trust etc.

Buyers will deal with a similar situation through their Solicitors.

We KNOW this will be time consuming, we KNOW this will seem quite invasive, but unfortunately this will be the law, it will be a requirement of the Ministry of Internal Affairs.

Should you wish to avoid this, any paperwork for the sale of a home must be done before 1.1.19, not necessarily going on the market BEFORE 1.1.19

For further queries, just ring us, we can explain further.

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So encouraging people to do their laundry before 1.1.19. How helpful of them!

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Gotta get as much of the country sold out from under young Kiwis as quickly as possible eh. If money laundering is what it's going to take, well, that's a sacrifice that has to be made!

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Nice work B & T – just why is it so “unfortunate” that this will be the law.

That first auction result here looks a fairly nice apartment. Surprising it went for so much less than its CV. Seems odd. $450k on a CV of $560k.

Maybe people worried about another apartment glut with net negative migration in Auckland and more supply coming steadily online?

Wow, a clear majority of houses selling above CV, that still doesn't sound like a market that's crashing

But a majority of houses aren’t selling. Of course the majority of houses that do sell will be at or above CV. That’s what I would think most vendors would set the reserve at.

Honest question, who do you think is being forced to compromise on price at moment? Buyers or sellers?

I think it's a stalemate. Buyers can afford to be picky and the majority of sellers aren't in a rush to sell.

In my opinion, housing values could be dropping without a visible drop in the average sell price so it would be foolish to just look at the averages and assume everything is stable. My logic is that buyers in New Zealand are still coming to the market with an average of around $680,000 to spend but as time goes on they're getting slightly better property for their money as vendors meet a soft market. The average purchase price doesn't change, just the quality of the property for your money.

Hypothetical: A house with a CV of $1.1 million that could have fetched $1.5 million prior to the FBB sells for $1.3 million, still a great result against CV. If that $1.3 million buyer spend bought prior to the FBB they might have paid $1.3m for a property that will now sell for $1.1 million. But they still paid $1.3 million, so there is no change in their place in the average purchase price spectrum.

I'm not saying that this is the case, but pointing out how easy I think it is to be complacent by accepting data that doesn't paint an accurate picture. A vendor decides whether the sale goes through, but a buyer will always set the price.

It's a Mexican standoff as one commenter put it the other day..

Fair enough.

Hi Nzdan,

Sorry - but it's fallacious focusing on average price.....

It's the median price that has veracity when it comes to comparisons over time.

Further, the main nationwide data sources show that median prices are pretty stable.

TTP

Mean or median will both fail to show the effect Dan is talking about, REINZ HPI would be better. But we won't see the effect till next month at the earliest

I didn’t focus solely on average price. As Pragmatist said, it still applies to median prices. I could’ve said “buyers median spend” I suppose?

Like I said, the average and median sell prices are set by the buyers. The sellers set a price or reserve to entice a sale but the average and median prices are a consequence of what buyers have to spend. In a softening housing market where there are no real changes to credit availability or servicing costs,we could see housing values creeping down without a change in the median purchase prices.

Honest answer, I'm a buyer. Won't be rushing to pay top dollar. Not a lot of fomo in Auckland right now.

Buyers have a chance to negotiate at the moment, so I think it’s a good time to get into the market. Plenty to choose from too. That said, sellers are unlikely to let a property go for less than CV unless they are forced to. And not many are forced to at the moment given low interest rates and relatively strong economic conditions.

FOMO is MIA, but his ETA is 2021/22.

BLSH: "Honest question, who do you think is being forced to compromise on price at moment? Buyers or sellers?"

The answer is in the average sale price and as there are more sales above CV, for now it's the buyers who have to compromise. If the vendors have to compromise the sale price will be heading down but for now that's not the case, most vendors will rather not sell than reduce the price, that's why there is such a low clearance rate.

Yvil?, the Auckland scene is very property specific. It's already been declared by many sources as firmly in buyers market territory. Buyers a picky and are seeking out and getting more property for the buck. These properties eventual sales prices are distorting the stats and giving the illusion of a steady market. Its not.

I'm assuming your comment is just a troll. I thought it best to clarify your misrepresentation anyway.
https://www.newstalkzb.co.nz/news/national/why-auckland-house-prices-wil...

That article states that the Auckland market is steady and still rising.

...and that's a fallacy as already explained. Zachary, since you missed the key point from the article as follows "It is not a question of whether Auckland's house prices will fall but by how much. Australasian Trading Management warned investors in its Daily Market Insights home values had "already pulled back significantly" in Australia's hot Sydney and Melbourne markets and the "price correction" was spreading to Auckland"

About sums it up really.

That was just the click-bait blurb. The article ended with:

According to this index, house values in Auckland are up 0.9 per cent over the past year.

Property valuer Quotable Value's House Price Index has Auckland values up 0.6 per cent over the same period.

Rather than suggest a fall in home values, Norwell said the house price indexes showed "just how stable the Auckland market has been over the past 15 months".

Yeah, but Nah. Not today Zachary, not today. REINZ, Barfoots and others alike are perfectly entitled to add their spin so not to spook the horses. They are entitled to be heard and supply questionable data in support. A lot more articles like this are appearing as of late ending with "Auckland's different"

Agreed.

My impression browsing through the auction results is that the ones that have gone for significantly under the CV (bar one in Takapuna) tend to be in the less 'desirable' suburbs. A couple of exceptional properties in average suburbs exceeded CV, but otherwise...

The premium end will do fine, however cheaper housing will continue to under-perform in both Australia and NZ. The fall in NZ$ & A$ will/is attracting ex-pat buyers and on a proportional basis the lower end of the market rallied harder over recent years.

I have spoken

All we are looking at here are the auction results, not all the sales - this is the flaw in any analysis of the result as a tool to measure the "market". If they don't sell at auction there is far more likelihood there will be a reduced price under RV than at auction.

For example having looked at the provisional sales data I sourced from Property Guru for Auckland Council area from Oct and Nov (not the best period of comparison but it is all we have currently), 147 sales out of 282 in the data set were under RV. Average sales value was $1.09m versus $1.18m RV, median sales values were $0.887m versus $0.98m RV.

Just one data set (and probably quite incomplete as it relies on self reporting) for one small period but just proves that you cannot solely trust auction results as your sole analysis.

There appear to be approximately 140,000 house sales per year in New Zealand yet it’s very rare to have anyone involved in them comment on this forum. It would be great to hear from those people. Carlos67 is the only one I can recall recently commenting on his sale. Without the coal face comments it’s all confirmation bias.

30% clearance rate at peak selling time is diabolically bad

Clearly the FBB is having an impact

For the 70% who cant sell it will be back on the market for sale by negotiation for a month or so followed by a set price followed by discounted price followed by desperate headlines like, must sell! vendor wants out! present all offers! etc.

pressure is building

The article is trying to potrey rosy picture but reality is opposite.

Yes, here's something more sobering, from Steve Keen, who was one the few economists to predict the GFC correctly. Housing Bubbles DownUnder: "New Zealand's house price bubble is even bigger than Australia's, when starting the comparison from 1990). He did pick the Australian bubble to burst back in 2011 but the Australian govt stepped in to keep market pumped up, so it's even bigger now.
https://www.patreon.com/posts/housing-bubbles-22800362

The second to last graph should shock everyone who frequents this site.

If you think that can keep skyrocketing into the stratosphere then you need to go to the looney bin

Don't agree. The second last chart is not prices, it is the relative change. Yes, it is high, but the actual prices are much lower here, and only one city (Auckland) and one regional centre (Otago Lakes) have affordability issues. They are severe in Otago Lakes, but generally not severe in most of Auckland (of course there are pockets where it is bad). Everywhere else is affordable for median first home buyers.

It is the last graph to focus on. And I would argue that the NZ data is overstated there. Keen isn't looking at the data correctly, just taking bald BIS data. In fact, the NZ data comes from the RBNZ and as they note, it includes debt for business purposes (investing in residential real estate as a business). Exclude that (as it is in the US and Australia) and NZ household debt burdens are no higher than the red US line.

Great, nothing to worry about! ?

Which world are you in?

Most parts of Auckland affordable to FHBs??? 600-700k is affordable ???

Isn't that the whole reason kiwibuild is being beaten up, as they state even those prices are unaffordable???

It is in no way affordable in Auckland. It's been going on for so long we have just become used to it, like in Sydney. We've come to believe a reckoning will never come. Go to somewhere in the developed world without an inflated market, come back and take another look at the very average Auckland houses supposedly worth $1m. They aren't. Sydney and Melbourne are starting to realise that.

Affordable compared to where? Housing is dropping in many overseas markets this year. Canada and Australia also have bubbles, so they're expensive, yes. We have a low wage economy. The only place that I've seen that's looking okay-ish in some places is Christchurch, where there are serious land/flood/quake issues, and prices have been dropping there. Still expensive at the middle and high end there though, compared to what it should be.

Interesting graphs. In terms of private debt to GDP Australia went from 90% to 120% over 14 years.
We're only at 90% so so potentially we could have 14 years of sustained private debt growth up our sleeve.
That's false logic though, Australia's and NZ private debt growth was spurred on by colossal capital flight from China, and the post GFC lowering of interest rates, both probably one time events. The next ten years might not look like the last, and now we've got baby boomers retiring en masse.

We need to be treating ex-pats like any other foreign buyers. Overseas cash has the same distortionary effect no matter who splashes it around. Kiwi houses should be for those who actually work, live and pay taxes here first and foremost.

Easy way to sort that out. Any owner of property should be treated as a NZ tax resident. That will sort out those working in low tax countries like Singapore, HK and the Middle East. I’d also like to see voting restricted to people physically living in NZ for the period since the last election. If they are going to vote then they need to live in the muck they create.

How about computing the number of houses sold at auction against the available number of listings ( by nego,asking price, deadline sale etc??

Too small to be picked up unless under a good microscope!!

Hee!Hee! Not good reading for REA's eh?

Number of sales are dropping off but good properties are still selling which means average price remains steady. FBB has only just come into effect so true effect of that won't be seen until next year. Anti money laundering law comes into effect in New Year which could possibly make it more difficult for those inclined to "bend" the rules. Plenty of houses left from 2018 on REA's books at the start of 2019, and then a new rush of people waiting until after christmas to sell.
Unless you find your dream house at the right price, you'd be absolutely crazy to buy before April 2019. There's going to be fur and feathers flying all over the place by Autumn.