Although the last week of residential property auctions featured less than half the volume of the prior week, as expected, the sales rate did shift up slightly, with 36% of the 211 properties offered at the auctions monitored by interest.co.nz in the week of 16-22 December selling.
That is up from a record low 32% in the prior week.
However, it is unlikely that most vendors would have been very happy with the results. Only 26 of the 77 that sold achieved rating valuation or better, a lowish 34% and well down on the 50% level at the prior week.
The prior week achieved the lowest sales rate of the year at 32%, so this week's 36% rate isn't a notable gain or achievement. Along with the very low levels of sold properties reaching rating valuations, it is safe to conclude that the year has finished on a soft note even if the volume of auctions is actually quite robust for this final week.
Yes, properties are selling, but mostly when vendors are prepared to meet the market, a market being driven by the lower offers being made by bidders.
But what is very notable is how well residential auctions are doing in Christchurch. Two in every three are selling in that market and almost 60% of them are going for better than rating value. It is an island of positivity for auctions.
Residential real estate auction activity will return mid-January and we will have our continuing coverage.
The table below shows the district by district results from the latest monitored auctions around the country.
Details of the individual properties offered at all of the auctions we monitor, including the selling prices of those that sold, are available on our Residential Auction Results page.
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59 Comments
Recent cash offer was declined due to seller not actually being ready to sell. So back to price by speculation. Watches several auctions just for interest. Both received multi million bids but declined to sell so greed still running strong.The volume if listings is growing. People are even listing in the last two days which says something.
That said more focused on cake and vino for the next month or so.
Very hard to find a real bargain, only saw one go after 12 months looking and following up on sold prices. You have to be prepared to waste a lot of time looking and putting in offers which is fine if its just a rental but if you are looking for your forever home its not going to happen, the RE is never going to tell you the vendor is on the ropes.
re .. "Very hard to find a real bargain..."
That depends on your definition of 'bargain'. I put two builder friends onto two Auckland properties. They thought every developer in town would be bidding up the prices. But they went along to the auctions anyway. A few naive 'investors' (buying the house) were their only competition. They both bought for bargain prices and said thanks in the nicest way.
the RE is never going to tell you the vendor is on the ropes.
Why not? REAs want a sale and their commission, especially when there are a lot of listings. We've been told the personal reasons why vendors wanted to sell on two properties we've bought. One of those times we were able to verify what the agent said via social media and we put in a low offer accordingly and it was accepted. Perhaps it's different when there aren't a lot of properties for sale, but that's not the situation now.
"The thing is, buyers have the luxury of time and indifference"
Buyers always have that choice. However that choice is heavily influenced by price expectations of buyers.
In an environment of upward price expectations, at extremes, buyers can go into FOMO. Owner occupier buyers compete with non owner occupier buyers (property investors recycling equity, property traders, property developers, property buying syndicates, etc) at auctions. This is how prices rose to the extremely elevated risk levels in Nov 2021. These are conditions known as a sellers market.
In an environment of flat or falling price expectations, buyers may choose to wait for lower prices, or make low ball offers to time constrained sellers. Under certain conditions, there may be an increase in time constrained sellers relative to the number of active buyers. These are conditions known as a buyers market.
Another person thinking the bank is a benevolent society. I wonder how many others are in a similar position? Quite possibly living at a reduced "rent" for some time so was aware that she'd loose the property eventually.
Absurd, isn't it? Imagine a renter who didn't pay for that long! Allowing more unpaid interest to continue piling up for two and a half years seems impossible to justify on grounds of responsibility, the policies that allow this leeway are blatant systemic manipulation of the market to prop up the ponzi. Ultimately, this is to prolong the siphoning off of ever greater shares of our productive output for consumption by bankers, shareholders and other topfeeding scum. Morally it is theft, on a grand scale. Sadly our politicians and lawyers will do nothing, since most of them are beneficiaries of the scam.
I was dumb - I still have my property - sure it is freehold but what a bonza run the NZ residential property market had and a sell signal if ever there was one
A my property value sinks I ponder a sale but don't act. I feel inept with non-sellers regret - sellers regret too as I sold the rental too early
Where to from here? Not a clue other than a big market blowout takes years to adjust so at best a hammering in real terms will continue
"what a bonza run the NZ residential property market had and a sell signal if ever there was one"
Most people couldn't see it at the time.
This is what some some commenters were saying at the peak of elevated house price risks on interest.co.nz
a) 9th Nov 21, 2:38pm
"I have always looked at this from the opposing direction - the risk in not owning a property? If you do not own a property you are short, not even square, but short"
b) 9th Nov 21, 5:52pm
"Or maybe right the opposite, don't hesitate, be brave and go for it, you'll be fine"
c) 23rd Nov 21, 8:52am
"It makes absolutely no sense for a couple like this to bank a capital gain now rather than wait two years and avoid 90k in taxes. The market is not going to crash 10% in the next two years."
d) 9th Nov 21, 2:38pm
"locally, I can not see anything in the near future that would decrease these current values."
f) 14th Oct 21, 11:25am
Shrewd investors will capitalise on perceived price weakness - cementing their position for the next market upswing. Well located property remains a prime investment for the long term. (But you already know that.)
What were property commentators (and potential vested financial self interests) saying at or just after the peak?
1) Tony Alexander - 19 reasons why there's no crash - December 2021
https://ndhadeliver.natlib.govt.nz/delivery/DeliveryManagerServlet?dps_…
2) Catherine Masters - July 2022
Why the New Zealand housing market is nowhere near crash point
https://www.oneroof.co.nz/news/why-the-new-zealand-housing-market-is-no…
3) Ashley Church - April 2022
Four reasons the housing market won't crash
https://www.oneroof.co.nz/news/ashley-church-four-reasons-the-housing-m…
4) Kelvin Davidson - Dec 2021
“But will prices actually fall? I’m not convinced because in the past a serious housing downturn has come with a recession, but no one is suggesting that and unemployment is low at 3.4 per cent.”
https://www.stuff.co.nz/life-style/homed/real-estate/127305870/what-lie…
5) Nov 2021 - Here's why it might be fruitless to pin your hopes on a house price crash
https://www.stuff.co.nz/business/300449314/heres-why-it-might-be-fruitl…
Canterbury has a broad based economy and the return of tourism makes it a likely that's it'll return to its days of being a growth center at par or above our other main centers.
The other factor at play is ChCh City Council's insistence in returning to the 'bad old days' where Council (elected by NIMBYs and property owners) returns to restricting dwelling supply through outdated zoning rules that promote spread, low density housing, car use and house price appreciation for the already 'landed'.
Yes, properties are selling, but mostly when vendors are prepared to meet the market, a market being driven by the lower offers being made by bidders.
Offers being limited by banks lending limits and test rates of 9-9.5% may do this.... more to come as listings increase... not many bother listing if they do not want or need to sell, its going to become a race to sell as the market drifts lower in 2024, sure rates may drop slightly but unemployment will rise.
Remember the best day to sell was YESTERDAY.
There are more people who want to buy now 12/23 than last year but cannot afford whats the vendor is asking..... banks will not extend credit to that level
In this market sales have to move to the bid , and they will. Its what we are seeing on the ground.
Maybe there are 20-33% of recent listing just trying to see if they can get silly money.... the numbers not selling seem to indicate this..... this maybe up to 1/3rd of the market do not need to sell... which leaves 2/3rds more realistic or desperate.
I think current sales reflects this smaller market. I think average prices will step lower in 2024 but some will be composition. lower priced houses may well have more motivated vendors to sell. There will be more actual buyers matching this segment in 2024.
Meanwhile this is what some some commenters were saying at the peak of elevated house price risks on interest.co.nz
a) 9th Nov 21, 2:38pm
"I have always looked at this from the opposing direction - the risk in not owning a property? If you do not own a property you are short, not even square, but short"
b) 9th Nov 21, 5:52pm
"Or maybe right the opposite, don't hesitate, be brave and go for it, you'll be fine"
c) 23rd Nov 21, 8:52am
"It makes absolutely no sense for a couple like this to bank a capital gain now rather than wait two years and avoid 90k in taxes. The market is not going to crash 10% in the next two years."
d) 9th Nov 21, 2:38pm
"locally, I can not see anything in the near future that would decrease these current values."
f) 14th Oct 21, 11:25am
Shrewd investors will capitalise on perceived price weakness - cementing their position for the next market upswing. Well located property remains a prime investment for the long term. (But you already know that.)
These commenters caused potential real damage with their advice - there are many buyers in the 2021-2022 who are under cashflow stress, and mental stress. Many will be unable to hold on and be under pressure to sell.
What has been the financial cost of following that advice that those commentators don't tell you about?
Here are some financial calculations for owner occupier buyers to think about. The Peaker and Buyer Today.
How does this compare with a Peaker and a Buyer Today (BT) in NZ? (Assuming that the Peaker can hold on and is not under cashflow stress to sell.)
1) Peaker
The median house price at the peak for Auckland was $1,300,000
With an 80% LVR, this is a mortgage of $1,040,000
The 20% equity is $260,000
2) Buyer Today ("BT")
In 2021, the buyer who waited, deposited the same $260,000 equity into a bank deposit earning interest. Also BT would rent an equivalent house and have still saved money due to the rental being below the monthly P&I mortgage payments of Peaker - in 2 years the savings would have been about $20,000 annually. So a Buyer Today would have an amount of $319,349 to use as a deposit.
The current median house price for Auckland is $1,040,000
Equity deposit of $319,349
The mortgage at this purchase price would be $720,651 (an LVR of 69%)
The Peaker has a mortgage which is higher by $319,349 (mortgage of $1,040,000 for Peaker vs $720,651 for BT)
Assuming BT, pays the same exact dollar amount each year that Peaker pays for their mortgage, as a result of that additional borrowing, Peaker is paying $856,632 more over the 30 years than BT (This is due to higher borrowing amount of $319,349, and total interest on this of $537,283 over 30 years). BT is mortgage free by the year 2042, whilst Peaker continues to pay their mortgage until 2051 (9 years later) - so after the year 2042, BT can save all that money that Peaker continues to pay on the P&I mortgage.
Assuming same incomes, and same living costs (food, travel, etc except mortgage) , BT can save the $856,632 in payments that Peaker is paying.
Remember that at the end of 30 years, the house price will be EXACTLY THE SAME for Peaker and BT.
BT will have more money available for retirement than Peaker. Conversely, Peaker will have less money than BT at retirement.
That single decision to buy in November 2021 would have cost $856,632 extra to buy the exact same house for Peaker compared to a Buyer Today.
What is the collateral damage of that advice for an interest only investor?
Note that the median house price today of 1,040,000.
If Peaker was on an interest only loan - then all of Peaker's equity has evaporated in 2 years.
Median House price: 1,040,000
Mortgage balance: 1,040,000
Equity is ZERO
Loss of 100% of equity deposit which may have been their entire lifetime savings.
Appropriate to requote this comment here, assuming the highly leveraged owner occupier buyer can hold on. If they're under cashflow stress and need to sell, it could mean the loss of a significant chunk of their entire life savings. Some will lose more than their entire life savings due to being in negative equity. Some people don't realise this is going on.
"a big market blowout takes years to adjust so at best a hammering in real terms will continue"
"a big market blowout takes years to adjust so at best a hammering in real terms will continue"
What the property promoters with vested financial self interests are unlikely to tell you.
Another common line of reasoning is buy property as the mortgage erodes with inflation.
https://www.oneroof.co.nz/news/can-rising-inflation-magic-away-your-mor…
So how has that worked out as at November 2023 for a property owner who bought a median priced house in Auckland at the peak using an 80% LVR?
1) Median house price in Auckland has fallen 19.1% in nominal terms
A) November 2021
House price: 1,300,000
Mortgage (at 80% LVR): 1,040,000
Equity: 260,000
B) November 2023
i) Nominal terms
House price: 1,052,000 (-19.1%)
Mortgage: 1,040,000 (deemed to be interest only for simplicity and comparison)
Equity: 12,000 (-95.4%)
2) Inflation adjusted values using a deflator or 1.12 as per RBNZ for corresponding period
https://www.rbnz.govt.nz/monetary-policy/about-monetary-policy/inflatio…
House price: 939,286 (-27.7% from original price)
Mortgage: 928,571 (-10.7%)
Equity: 10,714 (-95.9% from original equity)
That fall in inflation adjusted equity value is a significant erosion of purchasing power.
Which would a person prefer?
1) pay 10-20% higher rent or
2) lose 95% of their equity used as a deposit
Also note: an owner who owned their property mortgage free experienced a 27.7% erosion of their purchasing power due to the inflation adjusted change in the market price of their property.
Some of these people followed that advice. This is the situation that has resulted from buying when house price risks were elevated:
1) May 2022 - https://www.nzherald.co.nz/nz/waiting-for-the-guillotine-to-fall-how-in…
2) July 2022 - https://www.oneroof.co.nz/news/homeowners-scramble-for-interest-only-li…
3) Nov 2022 - https://www.stuff.co.nz/business/130353910/no-money-in-negative-equity-…
4) Jan 2023 - https://www.nzherald.co.nz/bay-of-plenty-times/news/homeowners-scared-a…
5) Feb 2023 - https://www.nzherald.co.nz/business/mortgage-shock-900fortnight-rise-fo…
6) May 2023 - https://www.nzherald.co.nz/kahu/peak-ocr-pain-auckland-couple-working-f…
7) May 2023 - https://www.oneroof.co.nz/news/latest-news/interest-rate-pain-banks-urg…
😎 July 2023 - https://www.oneroof.co.nz/news/they-dont-know-how-theyll-afford-it-home…
9) July 2023 https://www.oneroof.co.nz/news/desperate-homeowners-turning-to-third-ti…
10) July 2023 - https://www.stuff.co.nz/business/property/132483897/mortgage-rate-pain-…
11) Nov 2023 - https://www.oneroof.co.nz/news/refix-terror-homeowner-has-to-stump-up-a…
Many will simply be unable to maintain their higher mortgage payments as they renew their mortgage interest rate. Those that followed the advice of some commenters and bought in the 2021 - 2022 period using high amounts of leverage are going to lose a significant chunk of their equity, for some it could be their entire life savings. Some will be in negative equity and will owe money to their lender even after the residential property has been sold.
There will also be the non financial costs, the impact on their mental health. Unfortunately some may choose to resort to self harm.
What were property commentators (and potential vested financial self interests) saying at or just after the peak?
1) Tony Alexander - 19 reasons why there's no crash - December 2021
https://ndhadeliver.natlib.govt.nz/delivery/DeliveryManagerServlet?dps_…
2) Catherine Masters - July 2022
Why the New Zealand housing market is nowhere near crash point
https://www.oneroof.co.nz/news/why-the-new-zealand-housing-market-is-no…
3) Ashley Church - April 2022
Four reasons the housing market won't crash
https://www.oneroof.co.nz/news/ashley-church-four-reasons-the-housing-m…
4) Kelvin Davidson - Dec 2021
“But will prices actually fall? I’m not convinced because in the past a serious housing downturn has come with a recession, but no one is suggesting that and unemployment is low at 3.4 per cent.”
https://www.stuff.co.nz/life-style/homed/real-estate/127305870/what-lie…
5) Nov 2021 - Here's why it might be fruitless to pin your hopes on a house price crash
https://www.stuff.co.nz/business/300449314/heres-why-it-might-be-fruitl…
The general public, especially owner occupier buyers, need to be constantly reminded of those property promoters who are operating with vested financial self interests and who pose as "independent experts".
"Fool me once, shame on me. Fool me twice, shame on you"
Caveat emptor.
Fair average people want to be able to afford to buy a fair average house to raise their children and live in old age, not to much to ask was it? Its sick because they can no longer afford to buy unless they feature in a news paper article or have people to help with the deposit..... maybe we should start to trade food, if poor people could not afford it so be it.......
Its the numbskull local body green politicians mostly to blame for restricting land supply in Auckland and elsewhere and zoning heritage in inner city suburbs
Once house prices inflate they don't come back anywhere near to the starting point. Its criminal when rents go up, tenants can't save the 20 percent deposit.
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