Auction room activity maintained its recent spring momentum, although the sales rate slipped slightly at the latest residential property auctions monitored by interest.co.nz.
Altogether interest.co.nz monitored 340 residential auctions around the country in the week of 12-18 October, up from 289 the previous week, but down slightly from 343 and 356 in the two weeks prior to that.
Of the 340 properties on offer at the latest auctions,121 sold under the hammer, giving an overall sales rate of 36%, which was the first time it's been under 40% in the last six weeks.
There were no real surprises in the latest results.
Auction room activity is likely to continue to increase over the next couple of months, although there will also likely be some weekly ups and downs.
The latest results are pretty much what we would expect at this time of year.
Details of the individual properties offered at all of the auctions monitored by interest.co.nz, including the selling prices of those that sold, are available on our Residential Auction Results page.
73 Comments
We know that 3000 houses are being withdrawn from sale per month adding to a mounting overhang of potential future listings. At current still (lofty) prices, is more cheap debt on low deposits really conducive to an imminent floor / recovery in prices and on increased volume? This recovery, that from a capital gain hungry investors perspective, would need to defray todays holding costs plus more......
In this buyers market there need be no FOMO. For some time to come, discerning buyers know they'll be spoilt for choice.
"The latest results are pretty much what we would expect at this time of year."
I'll take your word for that. But even as prices 'slide' across The Ditch, their clearance rates are still ~60% and about twice what the expected rate is here. At some stage, Vendors will realise what they have to do to get the turnover up. And withdrawing their properties from market isn't it.
Doesn't our clearance rate struggle to hit 50%, even in high demand periods?
Venders will re-adjust their price expectations if they've significant pressure to sell. Thanks to the RBNZ tightening lending rules the past decade or so, there seems to be a lot less mortgages under significant pressure.
So likely we'd need more job losses as a catalyst. Will that happen before interest rates start with a 4?
I won't pin much hope on discretionary spending from lower mortgage rates saving the economy. That only happens if households once again feel confident to spend every last dime from lower mortgage payments elsewhere in the economy.
On the other hand, rate normalisation could put a floor on our sliding economy if it brings construction back to life.
Aside from greenfield new residential, construction seems surprisingly active.
As it does in many downturns, the nature of the demand changes.
What we're viewing as economic end of times could just be a reversion to a norm close to what we'd have had without COVID. Maybe plus the downfall of businesses/jobs that got stretched thin due to various dynamics of COVID, who now can't continue with the onset of subdued demand.
The cost and compliance to build new is nuts, interest rates are too high, and the selling market's encouraging people to stay put.
Also seeing a lot of infrastructure/industrial work going on. A lot was deferred due to the issues getting things done the last few years.
Construction back to life??
I see hundreds of new builds sitting around unsold just in my travels weekly......some of which are unsold for 6 months or more!
No construction rebound till massive, stale inventory is cleared. Then the hidden iceberg, of "withdrawn from sale" properties, çome out of the closet....
No construction rebound for a very long time!
Once the current flush of both CRE and Resi builds finish.......it will be skinny cat, starvation alley in most construction.
Demand is falling like a 1kg Gold ingot as supply is ballooning .......hard times in the building industry is just beginning.
Interest rate drops are too small and far too late. Carnage is already in the pipe.
I agree with you on a logical economic basis…but I just can’t help to think if rates get slashed, which without govt support is looking like the only play Adrian has, then I don’t think it will take as long as a few of you have said for that herd mentality of “we’re rich again” to kick in…obviously not overnight, but give it 12 odd months for sentiment to get strong enough to give a feeling of job security then a lot of people who have felt broke over the last few years will start to revenge spend & “treat yo self” like drunken sailors…there are more of them than there are conservative thinkers who will top up the household war chest first…ultimately en masse we’re not that smart…or we wouldn’t be here in the first place 🤷🏻♂️😂
For the spruikers saying we're not back to 2017 prices: 2021 CV 2.225m. Current Asking Price 1.45m. 2014 CV 1.65m https://www.trademe.co.nz/a/property/residential/sale/auckland/rodney/a…
Could be around $500k to reclad. And then you'd invariably lean towards doing the inside, so plus another $150-$250k. Add in around a year of holding costs to get that done (optimistic), and the high risk, big headache nature of taking the project on, and it's possibly still too expensive.
I've been involved in dozens of these sorts of jobs, and they're rarely financially lucrative for anyone.
Yeah its sad... they ignore the facts like the neighbouring property selling in Feb 2024 for 3.5 million with a CV 2.85.million https://homes.co.nz/address/whangaparaoa/arkles-bay/9-arkles-strand/VOY…
"No, looking for unusual price drops and tragic sales."
Do you report those on your substack?
It's weird how accusations of being a real estate agent get thrown around. Not that there is anything wrong with being an agent. However, it is commonly known and often remarked upon, that Kiwis are obsessed with real estate. Every other household appears to own a rental property or two. Thus the property market is of interest to not just agents but many people. Many immigrants are keen on it too. Rental property income is widely seen as a way to supplement income in retirement. Many households will anticipate entering retirement with super, rental income and some other modest assets, like term deposits and shares. This is widely recognised as a sensible and conservative approach to looking after one's future. So it should come as no surprise to readers that many commenters have what may appear to be an obsession with property.
"It's weird how accusations of being a real estate agent get thrown around. Not that there is anything wrong with being an agent"
The readership has a variety of backgrounds. Based on the comments by various commenters, there seem to be a few property industry related participants - real estate agents, builders, property mentors, mortgage brokers, property traders, property developers, architects, hotel owners, property investors, tradies, etc
Each commenter in the community here has a unique perspective given their lived experience and employment. Great community to try to understand the diverse viewpoints, perspective and where they're coming from.
Some do seem to have an undisclosed vested financial self interest and their own hidden agenda however.
At times, the tone and comments can become quite tribal beyond a coherent discussion of issues being discussed.
Interest rate drops like a fart in the wind.
This sold at auction on Friday for 951k, CV 1.84m:
https://homes.co.nz/address/auckland/te-atatu-peninsula/99-matipo-road/…
Well under 2017 CV
The Executors have instructed to completely ignore the CV and all website price estimates, as circumstances dictate the need to sell before/at auction. Someone is going to hit the jackpot, so make sure it’s you!
Opportunity knocks for all bargain hunters, but in particular for builders, developers, and handymen/women extraordinaires!
House needs work, relatives want money ASAP.
These historic values don't involve any appraisal of the state of repairs of the properties. They're just basic aggregates based on size, listed amenities, and relative values to nearby sales.
Toye, this property sold at auction today for 31% above CV. All is well.
https://www.barfoot.co.nz/property/residential/rodney-district/stanmore…
Nothing is appealing in property at current prices and rates.
Land is suddenly worth nothing because developers are all huddling together like a school of fish in hopes that the market improves and that the big bag economy shark doesn't take a bite out of them.
Williams Corp and Wolfbrook dead companies walking.
Land's worth less because building is expensive, as is credit.
There's always degrees of desirability in property, with varying degrees of price movement depending on the wider economy.
Get back to us when a newer or well renovated property in a highly desirable area starts halving in price.
Aren't we changing the goalposts now.
"Tell me when property prices are falling only for new properties in expensive suburbs, not average ones"
Now if only the property prices weren't primarily driven by houses that sold the most - some would say, those in average suburbs.
"Get back to us when you know for a fact that they have not paid their trades people or missed a single payment to their investors!"
Here's the thing, for any supplier, tradie or buyer of property of an uncompleted property, that will be too late - by the time that happens, they could become unsecured creditors if things get really bad.
If in doubt, stay away. Most people can choose to go about their daily lives without interacting whatsoever with those two companies.
CAVEAT EMPTOR.
Williams Corporation and Wolfbrook are both trading well and both financially stable!
People that make comments when they are ignorant of the facts should not commenting.
If these people actually spent the time to do research before commenting would be far more beneficial for everyone.
Tall Poppy Syndrome is rife in NZ.
Sound very much like you are heavily invested?..... in one of the property developers still walking......
I see the Duval investors are suing the FMA for actions..... Wonder if it will help focus the mind of the FMA??
Some Du Val shareholders take legal action against the FMA (nbr.co.nz)
Good point. People can throw out all the justifications as to why a vendor might accept less, but once those reasons are gone from living memory it becomes a datum in a range of sales. Enough vendors accepting less, and it influences the market trend.
"It needed work and the vendor wanted a quick sale" could be "was on the market for 6 weeks and the vendor couldn't wait any longer" or "the vendor was made redundant and cannot afford the mortgage". Each scenario might be different but that doesn't necessarily make it an outlier.
And a reminder of an opinion from a few weeks back:
"According to the Real Estate Institute, prices remain 15.9 percent below their 2021 peak.
Average house prices were 6.7 times household income, compared to a long-term average of 4.5. Debt servicing costs would take 43.4% of average household income...To get back to that long-term average of 34.4%, allowing for a fall in interest rates to 5.9 percent, house prices would need to fall another 16 percent.....However a further 16% decline in house prices wouldn't make housing cheap, it would just make it more like average affordability. Returning house-price-to-income ratios to be in line with their long-term averages would require drops of between 32% [on the household income measure] and 38% [on personal incomes]"
https://www.rnz.co.nz/news/business/521022/house-prices-need-to-fall-a-…
Sometimes crashes over shoot , -32% from here, in all likely hood it could overshoot if things get that bad, would require high unemployment and massive farm foreclosures. Globally co-ordinated stimulus may help but who knows.
I am not predicting that but aware of tail risk.
allowing for a fall in interest rates to 5.9 percent,
Rates are still restrictive IMHO at 5.9%, I would see 4.5% 1 year fix to be neutral is a decent recession, if things do not crash then its higher perhaps 5.5%.
Market is very slow, this from latest REINZ 4 days ago. A few more people now then 2000 as well. Auckland has not been this hard for 24 years in spring.
https://www.reinz.co.nz/Web/Web/News/News-Articles/Market-updates/REINZ…
Median Days to Sell
- Otago had its highest median Days to Sell since June 2023.
- Wellington had its highest median Days to Sell since July 2023.
- Tasman had its highest median Days to Sell since October 2023.
- In terms of the month of September, September 2024 had the highest median Days to Sell in
o Auckland since 2000
o Canterbury, New Zealand, NZ Excluding Auckland and Tasman since 2008
o Otago since 2010
o Waikato since 2011
o Gisborne since 2013
o Southland since 2014- In terms of the month of September, September 2024 had the lowest median Days to Sell in
o West Cost since 2007
REINZ mixes propaganda with facts, facts and stats and then this
“Local salespeople around the country have noted an increase in buyers attending open homes, more so than the usual spring lift we see each year. With some regions now seeing an uplift in sales (7 out of 16 regions), buyer engagement is improving, with listings receiving more enquiries. These trends could lead to a more robust market in the coming months, particularly if expected improvements in market activity and reductions in interest rates eventuate,” added Baird.
"it seems buyers are mass rushing to get money that exists. "
Are the buyers developers looking for land to landbank? And speculators / buying syndicates who are landbanking?
He added that developers were making a return to the suburb, spotting that land values had come down from their peak. Some of them had come from pricier Westmere and Herne Bay and saw the opportunity of doing high-spec homes in Point Chevalier.
“We are now getting inundated with calls from developers desperately looking for land.”
https://www.oneroof.co.nz/news/point-chev-do-up-bungalow-sells-sight-un…
"I've seen RW Mega Auction headlines online, if it is them it may be just a marketing ploy. There was one in South Auckland on 2 October and that's not the first one they've done"
Yes. Tom Rawson's Ray White real estate agent franchise office in Manukau.
https://www.raywhite.com/tom-rawson/real-estate-agent/tr14310715/
The arguments are solid.
Look, here's a listing I found, 2015 build, 2019 CV $1.1 million, had a murder suicide in the house in 2022 and half of it burned down, plus they found historic arsenic contamination in the soil, sold last week for $500k.
Markets heading to zero, I tells ya
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