July's auction room activity reflected the exceptional strength of the housing market on the back of extraordinarily low mortgage interest rates.
Interest.co.nz monitored 1015 auctioned properties over the four weeks from July 3 to July 30. Sales were achieved on 664 of those, giving an overall sales rate of 65%.
In the equivalent four weeks of last year (July 4 - July 31) just 883 properties were offered at the auctions monitored by interest.co.nz. Sales were achieved on 481 of them, giving a sales rate of 54%.
So the number of properties going to auction is up 15% on a year ago, and the overall sales rate has gone from just over half to just on two thirds.
However in July last year the market was just starting to find its feet again after activity was severely curtailed during the COVID-19 lockdown.
We may get a better comparison by looking back to the four weeks from July 1 - July 28, 2019, when there were just 529 properties offered at the auctions monitored by interest.co.nz and sales were achieved on 213 of those, giving an overall sales rate of 40%.
So compared to the equivalent four week period of 2019, the number of properties offered at auction has almost doubled, while the number being sold at auction has more than trebled.
Also of note is that in July 2019 only 54% of the auction sales recorded by interest.co.nz were at prices above their equivalent rating valuations. In July this year that figure had shot up to 96%.
What is particularly surprising is that the strength of the current market has been maintained throughout the winter months this year, during a period in which population growth from migration has been brought to a virtual standstill, the supply of new housing continues to set new records, the Government has announced significant changes to the taxation of property, and loan-to-value ratio (LVR) restrictions on new lending have been reinstated.
That points the finger of blame at the Reserve Bank for unleashing the genie of irrational exuberance on the market, by slashing mortgage interest rates to microscopic levels and temporarily removing LVR restrictions designed to temper irresponsible mortgage lending.
The feeding frenzy this produced saw house prices go not just through the roof, but up into the clouds, all funded by a growing mountain of debt while speculators, real estate agents and the banks clipped the ticket.
The next check on the market's momentum will be August 18 when the Reserve Bank will review the Official Cash Rate, with many commentators expecting it to significantly lift interest rates as it attempts to push the housing genie back into its increasingly battered looking lamp.
Details of the individual properties offered at all of the auctions monitored by interest.co.nz, and the results achieved, are available on our Residential Auction Results page.
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30 Comments
This is what we called economic boom & growth, properties are selling in a week (pre auction), the prices should go up, there is still lot of space available. Be Quick & secure your future get big returns in weeks..
People who cannot afford will never be able to, please leave the country or you are welcome to cozy state housing with your loved ones (courtesy Labour & RBNZ)
AJ123, you can laugh at FHB just like Jacinda Arden and Orr but you are correct this ponzi will not stop as long as likes of Jacinda and Orr are managing.
It's far more about RBNZ than Jacinda. It's a global issue with central banks around the world copying the US.
CGT, DTI, LVR, having no check on owning number of properties & interest only loan is also a global issue?
Its' all about Jacinda & RBNZ.
Yep, it’s happening all around the world too. World leaders and Central bankers are turning many many lives upside down. The New World order that was talked about back in the 1970’s has suddenly found acceleration. For many this new world will be completely unpalatable and unliveable.
Yeah I remember "we need a world govt" chatter back then. Sounded pretty reasonable to me at the time- Haha. It seems to be heading that way but I think a wave of sudden currency collapses will send us back to our tribes.
Noise, noise and noise!
RBNZ admits that they are consistent in getting house price projection wrong - How come their failure is always tilted in favour of investors thereby screwing FHB in all instances.
Recent data as back in December suggested that something is not right than in March and even now, can anyone deny that even after six months house prices are rising in double digit and Orr is still pursuing with wait and watch.
RBNZ though know that are wrong but still are consistent with their denial as want to support and promote the ponzi.
Now under pressure will play around with big words to get media attention but reality will be different.
Headline few days back that LVR will be tighten, obviously given a impression that for investor will move up from 40% but in reality are just doing some adjustment on high risk borrowing limit from 20% to 10% which will not have much impact compare to raising from 40% to 60% would have - Also is this not what government and RBNZ wants - NO otherwise would have done.
Talked about DTI but again is somewhere in future may be next year, when the need is today.
How do this $#@& get away and not grilled by media - fourth pillar of democracy.
https://www.stuff.co.nz/national/politics/300374056/housing-crisis-rese…
How long until we start to see riots on the streets and marches to Parliament? We are already seeing massive increases in crime, gangs, guns, burglary, drugs in a country that until a couple of years ago was relatively calm. Not anymore. It will get much, much worse. You only have to look at world news stations and independent broadcasters to see that it is happening everywhere around the world. We are better than this. The madness of central bankers and their New World Order needs to stop.
Interest.co.nz. Have you written about the world economic forums New World Order?
Also need to keep an eye on Parliamentary Bills that are put forward on Friday afternoons. Both the US and Australian governments have been trying to push quite serious amendments and bills through but luckily some watchful citizens have caught them out and with the help of the public lobbying their MP’s and Senators have managed to stop them going through. It also educates the MP’s and Senators who quite frankly appear to not really have a clue regarding the consequences of a yes vote.
Russell John Tully decided he had enough and took it out on a WINZ office in Ashburton. He was just one bad apple who lost hope in a system and lashed out with tragic consequences.
Please treat conspiracy theories with the scepticism they deserve. We are not a forum to spread such silliness.
I would think there would be a sense of betrayal by some voters who helped labour gain the power to govern alone and watched their prospects diminish.wonder how many will leave when the border opens now that there is no hope of owning a decent home and inflated prices are reducing your income,you would feel left out with every new story of people making millions trading houses while you are getting milked by the landlord.
‘Sense of betrayal by some voters’ - you are wrong there mate, a considerable number of labour voters have been betrayed. In my workplace, predominantly labour voters including my family will be looking at minor parties next election. Betrayal is putting it lightly. It’s criminal. She lied, deceived and took her voter base for idiots. Did the exact opposite of what she promised. National at least pretended that there was no housing crisis. Labour barked on about housing crisis and yet we have seen the unimaginable price rise under her government. It’s utterly shameful.
Come on now, she did such a great job with covid - loved those 1pm press conferences. Kia kaha.
Champagne all round for the banks, the realestate agents and the home owners. August 18th is going to be the date to remember for the event of the year. This will be a clear signal from the RBNZ if they intend to do anything or not. The time for wait and see is over.
RBNZ create hype to divert attention but ....fiasco.
Will they have balls to raise LVR for investors....extreme situation need extreme measures like they said and went least regret policy to support the ponzi.l, last year.
If Mr Orr is SERIOUS, should increase LVR to 60% for investment but will he ?
Nah, Orr is an incompetent clown who has badly mismanaged his mandate by promoting a reckless and ultra-loose monetary policy, who has caused an humongous inflating of the housing Ponzi to levels that make no meaningful financial sense any longer, and who has created the risk for sustained inflation.
He won't raise the LVR, nor will he ban interest-only mortgages, steps both necessary but steps that he will just not do. If he does something OK, it will be by chance.
Nah let the LVR be at 40. I reckon investors should pass DTI at 4, while DTI for FHB and OO need to be set at 7. Let’s see how that changes things. Oh and scrap IO loans.
It’s irrational exuberance combined with a Melt Up.
I agree with you. We're a minority.
"It’s the old adage of being able to sleep straight in bed at night, knowing that you are doing the right thing even though it doesn’t necessarily feel like the easy thing, or the popular thing.” Orr quoted as saying in a Stuff article. He must have a huge ego, how does he "know" its right! My bet is he holds rates, claims inflation is temporary & that he's done enough already for the time being. He will have minimal issue with house prices, as probably sees himself doing plenty by being the leader of the woke while the working class become the poor by his hand. Remember house prices were flat to declining in 18-19 so in Aug 19 he drops rates .5 to stoke the fire.[ Casual smear and insult not needed. Ed ]
Orr may use the Delta strain as an excuse for keeping the OCR as it is. It wouldn't be impossible considering global events have more impact to NZ than internal tweaks.
Orr is actually correct in his approach.
He's dealing with a far bigger issue than housing affordability, and his only choice is to push housing up since his term began.
He's the hero in this story.
Sorry, but I image Orr's policies (on which I agree with you that he has had no choice in implementing as I believe all central banks are under the same mandate) may well have enriched you substantially, prompting your "hero" worship of Orr.
It's disingenuous for the RBNZ to suggest that dropping the OCR to an all time low, even if it was because of a pandemic, they didn't expect asset prices to surge. Even with a weak economy you'd as a minimum expect those with savings to invest term deposits else where, let alone hedge funds and so forth taking up cheap money. The fact that real estate dampening controls were not rolled out with the OCR drops has led directly to where we are. Are they fools, bad at their jobs, who misread the economy, or is this wealth effect what was desired to drive NZ through C-19 with a poverty abyss being collateral damage. I rather think the latter.
Real Estate agents are no doubt pouring a lot of champagne these days. They are big winners from auctions.
"Low interest rates have released the genie of irrational exuberance onto the housing market"
Nothing surprising in it. Nothing new. To control speculative demand and knowing that will have to reduce the interest rate to lowest level, What was needed was counter measures like LVR ( and what they did along with zero interest rate removed OVR to promote speculative demand).
Even now knowing that nothing is controlling the ever growing house price, should immediately raise LVR to 60% for investors as they do not want to hurt FHB and for a change actually work in favour of FHB.
DTI should be implimented asap to protect FHB, though some will miss the opportunity to buy but protect them from borrowing beyond under FOMO with belief that house prices always goes up on a weekly basis ( not to be blamed as RBNZ and Government has given that feeling and assurance).
Very important that is not being discussed though used in other countries even Australia, restricting Interest Only loan.
Ironically it’s the threat of new restrictions that is driving a large part of these rises. Many are thinking: right now I can buy a property, but soon they will introduce restrictions making me unable to buy. Best jump in while I can.
Without the threat of new restrictions, gone would be the need to jump in right now.
A strange world we live in
It will be wise to passage before being locked out when one doesn't hold the key.
July's auction is pretty much expected (normal) and is nowhere near exceptional.
Increasing inventory resulted in the same in number of sales. The demand and supply progression is consistent.
Since there is no large differences in the change in sales rate compared to it's previous year, we cannot conclude that the housing market is escalating in momentum.
Compared to previous years of sale at Barfoot and Thompson, July 2021's sales by the same in Auckland is no outlier.
All this points to the market being normal and behaving the way it should this month like any other years.
I think we shouldn't cry wolf about the housing market in case no one is going to believe when the real one shows up.
Interest rate rise will prevent FHBs from getting on the ladder- be quick.
* Charts courtesy of my grand kid who's finishing high school.
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