Auction numbers declining as the end of year wind down begins, but sales rates are steady

Barfoot & Thompson took fewer properties to auction last week as the market begins its wind down to the Christmas/New Year break.

The agency marketed 148 properties for sale by auction last week (3-9 December) compared with 180 the previous week and 194 the week before that.

However, while the number of properties going to auction was down on previous weeks, the sales rate was virtually unchanged at 30%, compared to 29% in each of the previous two weeks.

Sales rates at the main auctions where at least 10 properties were offered ranged from 28% at the Shortland St auction on December 5, where most of the properties offered were from central and central/fringe Auckland suburbs such as  Remuera, St Heliers, Freemans Bay and Epsom, to a 36% sales rate for the properties auctioned on-site.

At the big North Shore auction the sales rate was 31% and at the Manukau auction, where most of the properties were from south and east Auckland suburbs, the sales rate was 33%.

So the sales rates were remarkably consistent although results would have been disappointing at some the smaller auctions (see table below).

Details of the individual properties offered and the selling prices and rating valuations for most of those that sold are available on our Residential Auction Results page.

Barfoot & Thompson Residential Auction Results 3-9 December 2018
Date Venue Sold Not sold Total % Sold
3-9 December On-site 5 9 14 36%
4 December Manukau 9 18 27 33%
4 December Shortland St 2 3 5 40%
5 December Shortland St 9 23 32 28%
6 December North Shore 12 27 39 31%
6 December Kerikeri 0 2 2 0
6 December Shortland St 0 5 5 0
6 December Pukekohe 1 4 5 20%
7 December Shortland St 6 13 19 33%
Total All venues 44 104 148 30%

 

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56 Comments

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If you're one of the auctions that were unsuccessful, or your house is part of the 6 months of Auckland stock on the market, whats going through your head as you lie on the beach this summer?

What would your new years resolution be?

Depends why they are selling I guess. Bit of panic if they have to sell for some reason, especially with the knowledge Sydney and Melb are plummeting. What'a in store for next year, they'll be wondering.

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What about the parents who laid down the 20% deposit for the son and wifes house deposit not as a loan or a gift but as a retirement investment to be recognised down the line?

One thing that is severely misunderstood and neglected is the amount of late 20s/early 30s who either acquired debt from multiple sources to obtain the house (bank and parents) or parents have part ownership in their house. I would need to take off my shoes and pants to count how many times I have heard of this arrangement in recent years.

Interesting dinner table conversations this Xmas.

What happens to the investment when the Son and Wife go through a divorce, nobody was diligent about pre-nuptials and the wife is entitled to 50% of the property?

A real concern. I don't want any of my wealth going to any non-blood relatives. I'm hoping that the emerging shared equity programs will come up with a legal framework.

The parents will be able to extract their contribution/share but it may be a litigation nightmare if they have not documented the agreement adequately. Section 339 of the Property Law Act 2007 allows the Court to order the property sold and proceeds divided or for one owner to buy out another. A property sharing agreement at the front end would save a lot of hassle if it turns to shit.

See https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=118... for example of gifts/loans.

Nothing like a divorce to redistribute wealth.........

TTP

As long as it stops with the Son and Wife!

Masher: "What would your new years resolution be?"

Stay where we are and enjoy the sunshine?

Yes just enjoy the sunshine.

How many people sell just because they are bored ? Kiwi's move house far too frequently.

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Yes, sales rates are stable – just at appalling levels though.

Headline could have been “Auction sale numbers decline, sales rate still in the toilet.”

Although it has broken out of the 20s, just. It cracks me up every time I read Australians worrying about being in the 40s versus the 60s.

It's all a bit academic if house prices aren't actually falling.

It’s not academic if you want to sell your house. I wish we had a data set of people’s desire to sell so we could capture changes in people wanting to sell but not having their house listed.

" ... people wanting to sell but not having their house listed"

is that like people that want to get thin but go to KFC everynight. Just seems like it would have a similar success rate.

It's academic because everyone wants to sell their house FOR THE RIGHT PRICE. A lot of the excess stock at the moment IMO is people trying it on e.g. avg Auckland price is $1m, i'm sitting on a $700k house in Manukau, list it for $900k or near offer and let it sit on the books forever. If it sells great, if not then i'm in no great hurry to go anywhere.

But the excess stock now paints the picture that there are 10s of thousands of desperate sellers out there when that may not be the case. A sign it is the case is when sale prices begin to fall; which so far has not occurred.

It’s not though. The longer prices stay flat they are in effect going backwards (compared to the risk free rate of return).

Fear and greed drove prices up. While prices are flat, it removes FHB fear of missing out getting on the “property ladder”. Rather than push forward a purchase, flat prices mean they can wait and save a bigger deposit.

While prices are flat lots of “investors” will decide the low yields aren’t worth the hassle/risk. Capital gains make up most of the return for a lot of investors and without them the equation looks far less attractive.

Sydney was flat for several months before the current falls. Auckland looks set to follow suit, the only question is when

I'll believe it when I see it.

It depends on the FHB's circumstances. If they're renting then they are paying someone else's mortgage or holiday.

Also the current house owners may be renting or living in the house so either deriving rental income or avoiding rental costs so holding the house is not going backwards (or at least is offset).

Current sales prices indicate there are sufficient owners who are able to weather a flat period of prices (so far at least (queue the around the corner apocalypse predictions...)).

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11

Agents will tell you otherwise! A few will be along shortly

Barfoots will be happy with that result.

Out of curiosity has anyone done the figures for sales above/below RV? A quick glance would seem a few in my price range now selling a tad below their valuation, (a lot more than previously anyway). Obviously this is anecdotal especially with a lot of sold prior notifications.

Someone will come along shortly to inform you that majority of the property sold achieved above CV and it's time to buy

I was in Vancouver for work last week. Talking to people there. Its the high end part of the market that is seeing the biggest declines. A couple of boomer family friends looking to downsize have been unable to sell. Whereas the condo/apartment market is relatively stable.

Which anecdotally is what you're hearing out of Sydney. Top end of the market is seeing the biggest declines. But the rest is following suit there.

Are we seeing the same behavior in NZ. Not trying to cherry pick as haven't gone through ever auction. (Obviously, properties that are at a clearable price are selling under, over or around CV). But this one stuck out as I grew up near there. https://harcourts.co.nz/Property/864983/HOB5365/85-Totara-Road CV: $7M. Asking for offers over $5M.

Eventually, would you expect the top end declines to flow into the lower end of the market? If not, why not?

As people downsize, from 'whatever' to something smaller - to release equity; have less unused bedrooms to vacuum etc, the 'bottom' comes into demand as the top goes out of favour. What affects it most is 'how 'downsized' are the buyer prepared to tolerate to reflect their lifestyles?". Papakura, for instance, may not suit the vendor of your listing, but something smaller in Queenstown(say) might?

Anecdote: I expected Phil Rudd to get about $8 mil for his place. It's been marketed for a few weeks now ( tens of thousands of hits on TradeMe listing) and an asking price has now emerged - $4,100,000.
So there you go. 'The Top End' may not be as high as it once was!

It would be interesting to see how close homes.co.nz came to hitting the 4.1mil number. They seem to be close to the mark with the current asking price on the Whenuapai property.

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Theres a certain lady from Huawai who wants to sell her 17 houses in Vancouver, apparently it's not as nice a place as it used to be.

Used to be the easiest place on earth to wash cash. Now, not so much.

Haven't done any real analysis, but just flicked thru the Auckland Auction results on here. My quick impression from that is that we are developing a two tier market. The top end stuff is pushing higher, and the lower end stuff is dropping. The majority of places with RVs under a million that are selling below RV, and most places with rv of >$1.5m are going higher.

Of course there is a huge selection bias in this.. only the places that sold at auction/prior make the list.

Not helped by all the results that don't have a sale price and a few where DC & co haven't been able to match an RV.

So in other words clear as mud....

Feel free to break out R and do your own statisical analysis. :)

I don't think any amount of "analysis" will provide any clarify hence the comment about as clear as mud. - it was not intended as a comment on your analysis.

Not that Trade Me asking price is the best indicator. Because what actually goes for asking.

But asking price in Auckland compared to last November:

- 1-2 Bedrooms up 10.9%. 741,770
- 3-4 Bedrooms flat 0%. $943,300
- 5+ bedroom down 5.6%. 1,354,550
Interesting to see where it nets out over the next 12 months.

Yep with free fertilizer available on the beach to be scooped up every time it rains.

They're probably happy with a $3.2 million capital gain in 15 years.

Yes I agree they would be. But why is the asking price 2 mil under C.V and not 2 mil over C.V ?

Global warming, that house will be under water in a decade, bring your scuba gear.

It's been sitting there for a while

Listed: Mon, 8 Oct

“Severe Collapse” of Home Prices Might Trigger a “Financial-Institution Crisis” in Australia: OECD Frets about the Banks.
https://wolfstreet.com/2018/12/10/severe-collapse-of-home-prices-might-t...

You reckon! (H/T Macro comments)

"BILL GUPTA, PROPERTY INVESTOR: Everyone wants to come to Sydney and Melbourne from overseas. Everyone wants to live in these established cities where the jobs are available. Everyone wants to buy the property here because the value grows in Melbourne and Sydney, as compared to the other states.

GEOFF THOMPSON: The Guptas now own more than 30 properties between them.

GORO GUPTA, PROPERTY INVESTOR: I call it generational wealth. When you are building something with generational wealth, you build it together. So, Yes, I might have a few properties, dad might have a few properties, mum has got a few properties and even grandma has a couple up her sleeves, right.

For us, it is a never-ending thing. Buying as much of the monopoly board as one sees fit.

BILL GUPTA: My view is that every 10 years the property doubles while other investments, there is always risk."

(Bills' CV)
https://www.linkedin.com/in/bill-gupta-b0477a51/

bw - yeah i just saw that ABC clip.
https://www.youtube.com/watch?v=usfe9Ue6H90

Andrew - That was a very informative article. I then clicked onto the next link and got this.
https://wolfstreet.com/2018/12/01/update-on-property-price-declines-sydn...

looking good, can't go wrong turns to custard and then spreads across the ditch.

Someone needs to step up and ask RBNZ some difficult questions. Anyone who thinks they can drop interest rates to SOS, is kidding themselves, with this much risk about investors will be bailing or wanting higher returns.

It's a bit like saying kangaroos are going to spread across the ditch.

It hasn't happened......

TTP

Yes but we do have wallabies.

Did you mean 'wallies'...lol.

Hahahahaha ahhh hahahahaha arrrrrhahahahahha no he means Wallabies.

30% Auction clearance rates are still terrible results.

I think you’re being kind – I called them appalling.

Sounds like DGM-speak to me.

TTP

No bias – it’s the market – and it doesn’t care.

If you live through the drop you'll be okay on the other side. Even if you sell, you might have to buy back into the same falling market. Tricky but possible. Sell well then buy well. Go on, back yourself!
As Billy Connelly said on tv the other night, "There's no such thing as bad weather, it's just the poor choice of clothes you're wearing that's the problem."

Lovely and very apt quote

"There's no such thing as bad weather, it's just the poor choice of clothes you're wearing that's the problem."
Like that quote, or another way to put it.
There's no such thing as bad time to buy a house, it's just the poor choice of timing(up/down/high/low market) when you buy that's the problem.
So its a bit like timing the market, but that is hard to do at the best of times at least.

.