Auction sales rates are lower in Auckland than the rest of the country

Auction sales rates are lower in Auckland than the rest of the country

Auction sales ratios are holding remarkably steady during the peak real estate season.

Interest.co.nz monitored 279 residential property auctions throughout the country in the week from 11-17 March.

Of those, sales were achieved on 107 properties, which gave a sales clearance rate of 38%.

That was exactly the same sales ratio as the previous week (4-10 March) when 320 auctions were monitored and the sales ratio was also 38%.

Of the 107 properties that were sold between 11 and 17 March, interest.co.nz was able to match up selling prices with rating valuations (RVs) for 90 of them.

Of those, 46 (54%) sold for more than their RV, 41 (46%) sold for less than their RV and three (3%) sold for the same as their RV.

That was a very slight improvement on the selling prices achieved in the previous week when 48% of properties that sold went for more than their RV, where a match was possible.

Auction activity continues to be dominated by Auckland, where interest.co.nz monitored 201 auctions between from 11-17 March, but the sales ratio was lower in Auckland, with sales recorded on 65 of those properties, giving a sales clearance rate of just under a third (32%).

Of those, selling prices were able to be matched with RVs for 53 properties that sold and of those, 20 (38%) sold for more than their RV, 32 (60%) sold for less and 1 (2%) sold for the same as its RV.

Details for the individual properties at the auctions monitored by interest.co.nz are available on our Residential Auction Results page.

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Good to see a continuing stable/steady market.

TTP

Meanwhile, out in the real world.. Auckland market is compressing. The bottom is standing still and the top is falling. B&Ts West Auckland auction on Tuesday hit a 69% clearance rate, while the top end markets "leafy inner suburbs" are in the mid 20% range.

The question is how log can this keep up before the bottom starts falling too, or will the falls at the top end stop?

You are correct Stable / Steady at lower level.

My friend who was looking for a house in Howick, Pakuranga, Buckland beach and near around just put in a deposit for house in high 800s which has a CV of 1150000 and another friend is trying for a house in early 900s which has a CV of 1225000 and agent is asking to present offer above Mid 900s and that property is in market for over 4 months (he could pay mid 900s but now has lot of choice in that price range and just being choosy to get the maximum for his $$ also not in a hurry and that is exactly what all buyer should do now :).

That lowball approach will sometimes pay off if very highly lucky but not to the extent of knocking hundreds of thousands off the price. Try private sale, since then the seller does not have the 50k agent commission and marketing costs.

are u able to advise which property your friend is looking at? Trying to get o ntop of pricing in the same area except I haven't looked in Pakuranga - more Bucklands Beach and Howick. thanks for the help

TTP - Agree a stable market is good for everyone. Another blow for the DGM's who want a market crash so they can buy property they wished they had bought in the past.

Agree with you Shoreman.

Indeed, one has to be cautious of those here who want to see a crash/instability - and frame/fabricate their "analysis" and comments accordingly. Some of them would have us believe that black is white - and night is day.

Similarly with those who want to see quick and large capital gains - ad infinitum. That is not how housing markets work.

It's unfortunate that bias and self-interest drive the motivations and writings of various contributors here.

Beware of those with obvious personal agendas.

TTP

Amusing.. a RE agent lecturing on vested interests in the RE market.

Kettle, I think the Pot wants a word with you..

Hi Pragmatist,

Again, you're mistaken:

i) I am not a real estate agent (and have never had any connections with that "industry").

ii) Real estate agents want an expanding/growth market - and not a stable/steady market.

TTP

Houses below 20% of CV is bad and definitely is not the end so from here on any fall will be worse.

Don’t conflate “stable” with “steady”. This is a market of consistent instability.

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Another choice of headline could’ve been, Auction Sales Rate Remain Below 40% Nationally. No need to spin a positive tone when it’s not.

The previous week, 61% of properties sold below their rv in Auckland, this week it's 62%, does that define steady or gradually declining market.. i guess it lies in the eyes of the beholder..

David/Greg a request. Could the suburbs under the 'area" dropbox in the residential auction results page be sorted alphabetically please. Its cumbersome to scroll through the list and try to find the suburb you are looking for when they appear to be in a random order.

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Realestate.co.nz for Auckland = 14,638. Listings have steadily risen all week in the country's biggest market. Individual listing view numbers are truly pitiful. There's now an increased confidence there are more losses than gains on the horizon. US yield inversions are getting stronger and falling global yields are signalling challenging times lie ahead GLOBALLY. The truth is, the entire nationwide market is about to be delivered a blindside. What happens when those in blissful denial wake up to find their job security is being challenged by events beyond their control?

Just telling things as they are. I'm proud to declare myself a bonafide (mortgage and rent free) DGM who bought his house to live in and raise a family.

Awesome, keep the charts coming! Great effort for tracking this

That’s staggering. Something has to give.

Another chart.. all the core residential listings. (Houses, Townhouses,Units and Apartments)

http://iforce.co.nz/i/mbq3v44r.efd.png

On RE.co.nz, between 16/1/2019 and today.
Total Listings: 12198 -> 14584 (+19.5%)
Houses: 5898 ->7767 (+31.7%)
Apartments: 1672 ->1835 (+9.75%)
Townhouses: 512 -> 666 (30.1%)
Units: 320 -> 428 (+27.3%)

Non-core: 3796 -> 3888 (+2.4%)

That’s interesting thanks.
Especially the big jump in houses.
People can’t say the big jump is due to apartments.
Most houses are in the middle to upper price ranges. At typically upwards of 900k, they are out of reach of many prospective buyers.
Quite a few new houses have been built too, often one house to the rear of a property. The owners of these properties tasted greed and liked it. Unfortunately these houses are often way overpriced. We’ve had one next door to us sitting on the market for over a year. Some really bad decisions have been made by some people.

Its also interesting to compare to Sydney. Population of 4.8 million with around 35,000 houses for sale (at a 10 year high), and everyone describes it as massive oversupply.

Yet Auckland, with a population of 1.6 million, has 14,000 houses for sale, but has a "shortage". If Sydney had the same ratio of house for sale to population as Auckland they would have around 42,000 houses for sale.

Hamilton trademe listing hit 1002 on Friday. That's 200ish higher then start of year. Pity I'm now moving to NP...

Retired poppy, the house owner loudly claiming to be uninterested in the current value of his one house takes intense monitoring of the auckland housing market to new heights (intended pun). Please find a real job to put your "analytical" skills to better use

Houseworks, before shooting from the hip, read comments more carefully. My home of 22 years is to live in not speculate on. Its value is largely irrelevant. My retirement years are more than comfortably covered by other means.

Yeah things don’t look great, the bulls have a point in that things are holding together, but I think it’s only just holding together. I think the housing market in Auckland is in for trouble come autumn / winter.
But the bulls don’t need to worry too much, because things will fall away but we will see the OCR cut 2-3 times to prop things up. That will probably limit the falls in Auckland to no more than 10-15%.
Wasn’t Tony Alexander saying last year there won’t be price falls, and things will start lifting again soon?

Some have commented on this article about property prices being stable in Auckland.

Perhaps they are comforted by the fact that:
1) for the last 50 years, residential property prices in Auckland have doubled every 10 years
2) there is a shortage of underlying supply of houses when compared to underlying demand.
3) the high cost of construction cannot fall by much
4) residential property prices in Auckland fell by about 8-10% during the GFC in 2008

What potential forward looking property price indicators are they overlooking or ignoring?

1) the increase in the number of properties listed for sale
2) the longer period of days to sell
3) the lower number of property transactions
4) the interest only loans becoming P&I loans

The pressure is building up as more and more properties are being listed for sale - it is akin to water slowly filling up in a sink, then at some point it reaches breaking point and overflows ...

This property mentor who has been a key proponent of buying Auckland residential real estate focused on capital gains has finally started to understand what many on here have been warning about for the last 2 years or so. He gives the example of a financially overleveraged property investor, Eddie, with a home in Epsom, and 2 investment properties (one in Blockhouse Bay, another in Onehunga). Eddie was fortunate that he has access to capital elsewhere - many other highly leveraged property investors are unlikely to be in that fortunate situation.

If there are many more overleveraged property investors like Eddie with pending interest only loans become P&I, then that could result in an imbalance between effective supply and effective demand of residential real estate in Auckland. Any potential downturn in the economy would exacerbate the imbalance significantly.

The essential question is how many more property investors owning Auckland real estate are potentially vulnerable to financial stress, and how many residential properties could be listed for sale as a result of increased financial pressures.

https://www.youtube.com/watch?v=eb9U7PwXBew

It's worth remembering that real estate opinions on interest.co have exactly zero effect on the real estate market.

Looking at last weeks sales prices and comparing them to known RVs does show a slight drop in prices. When I did my "analysis" over a year ago I would generally get an average selling over RV figure of around 4%.

Excluding apartments and going through all the Auckland auction sales for last week I get total sales of 72.777M with an RV of 75.025M which is -3%.

Roughly it looks like a 7% drop in prices over the last 12 months or so.

Significantly, spot checking a few of the sales that went well below RV I see that they last sold some years back. It would appear these results are because the people who are selling are still getting a good appreciation regardless. They would likely have got 50-100k more if they sold 12 months ago but they probably don't care too much even if they are retiring and moving out of the city. If they are staying within Auckland and just moving to another house then that house will be cheaper too.

Those feeling the most pain would be investors selling now who bought only a year or two ago. There actually shouldn't be too many of those as everyone knows it is a long game.

7% down sounds about right. I think Auckland will drop at least another 5-10%, OCR cuts will probably limit further damage. Although a big overseas economic event could see a 20-30% fall.

Funny – with the delayed comment approval this is all tripping over itself.

We are on the same page.

Thanks zs, insightful

Excellent -7% “feels” about right at this point – no panic, a gentle market readjustment, simply reflecting some key market drivers either gone or weakened.

I think further adjustment to come – perhaps another -7% or so – all things being equal.

Hardly a disaster if that’s all that it is – extreme might be total -20% - a nuisance for some, but again, hardly a disaster for longer term holders.

A saving grace could be a continuing lowering of interest rates – however, they could be lower for a reason, which may not be such good news.

Circa 15% would be a good outcome overall. Wouldn’t be too many underwater with that kind of ‘correction’.

And meantime give some time for the long term average to reassert itself…

"Those feeling the most pain would be investors selling now who bought only a year or two ago."

There are those who bought in 2014 onwards who are feeling pain. Pain can be experienced in one of two ways:

1) negative equity - the key is that these owners can hold on and continue with debt service payments in all economic conditions
2) negative cashflow - this is the more common problem - look at the example of Eddie of the video link in another comment on this thread. He is currently paying $1,000 per week out of his own household single income to maintain ownership of his two investment properties. Can he continue making these payments in all economic conditions? And in August, he has another loan going from IO to P&I which will result in further cash outflow.

"There actually shouldn't be too many of those as everyone knows it is a long game."

In the case above, Eddie has purchased for the purposes of long term, and knows it is a long term game. The question is can he continue making these payments in all economic conditions? Many property investors have paid very high prices for residential property in Auckland in recent years and financed their property purchases in such a manner that they are more highly vulnerable to financial stress. Many property investors learnt these painful lessons in 2008-2010. There is a whole new group of property investors who have entered property investing after 2010, who have not yet learnt the painful lesson of being over leveraged.

If you bought around 2014 or thereabouts you should be able to sell at a tidy profit – just get out and be done with it.

Thank your lucky stars the market went somewhat ballistic in your favour with possibly very little skill set.

Christchurch market is the most stable market in the country!
Despite the doom and gloom merchants, things are looking good for both buyers and sellers!
If you are looking to buy property, talk to people that know what they are talking about, rather than listening to people that have no expertise in property success!!