Residential auction rooms are back to operating with a full head of steam, with activity back up to the levels of mid-December, before the market went into hibernation for the Christmas/New Year break.
Interest.co.nz monitored 422 residential auctions around the country over the week of 8-14 February. Of those 162 sold under the hammer, giving an overall sales rate of 38%.
Where selling prices could be matched with rating valuations, 39% of selling prices were above or equal to their rating valuations.
Overall, the market appears very little changed from where it left off late last year, with the number of sales, the sales rate and price/rating valuation figures all very close to those being achieved in December.
That suggests the market is heading into 2025 on a relatively stable footing.
There has been no marked upturn in activity as some pundits have predicted but things haven't crashed either.
So steady as she goes seems to be the way things are heading at the moment.
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 the Residential Auction Results page.
105 Comments
Hi Greg, the percentage of successful auction sales over the years is often discussed here however we only go on vague memories about the actual figures. Do you have the statistics for auction results going back to before COVID? Perhaps a graph and analysis of the success rates. It would be interesting to see how it has trended over the years.
That’s fair.
My opinion on the auction results is they are relatively flat and consistent with recent results. My opinion is that the days of housing investment giving astronomical returns are more than likely behind us.
It is my view that as a country we need to focus on productivity and not be so fixated on housing. It is my view that our ability to provide affordable housing to everyone should be our benchmark for success as a country. We will need to get wealthier as a nation through investment, research, innovation and productivity to achieve this. IMO.
Sorry, but you're still not getting it. No one is saying that the price will change because of new, lower CVs. RI was simply saying that lower CVs will increase the number of houses "selling above CVs because the new threshold is lower. I hope you understand now ?
I get it, you think prices won’t drop even if RVs do. I just feel like property investors always find a silver lining, even in the worst news. Sentiment will shift once RVs are released. Everyone knows someone who bought above those RVs and got burnt. Auckland’s probably never seen RVs drop before.
To paraphrase "RVs don’t matter, they're just a guide." Use RVs on the way up, but ignore them on the way down.
You would be Public Enemy #1 at the property seminars where Dr Y types go to build on their wisdom.
Suspect too you might have a field day debating the mighty Ashley Church. Always thought that guy would unravel like a ball of wool when his steady patter of memes and urban myths were even slightly probed.
That suggests the market is heading into 2025 on a relatively stable footing.
There has been no marked upturn in activity as some pundits have predicted but things haven't crashed either.
So steady as she goes seems to be the way things are heading at the moment.
This seems a pretty reasonable and satisfactory summary from Greg Ninness.
So why are Kraken and DGM so bitter and scratchy?
A couple of oddballs if ever there were ........
TTP
One group of property promoters show calculations that the property is cashflow negative for a period of time. They have also factored in lower mortgage rates and rising rents which forecast the property to be cashflow positive in the future.
They also assume house price growth of 5% - 6% p.a. (Some believe that house prices double every 10 years and may use that number in their calculations)
Capital gain oriented investors may still believe those rates of house price growth are achievable and buy.
Owner occupier buyers: CAVEAT EMPTOR
Do residential dwelling prices double every 10 years?
Here is where that comes from:
https://youtu.be/j4M67KcLdmk?t=221
A book written by Dolf de Roos, showed the historical residential dwelling growth rates from the period 1966 - 1995 (a 29 year period) for the following areas:
a) Auckland: 11.2% p.a.
b) Hamilton:10.2% p a.
c) Tauranga 10.2% p.a
d) Palmerston North:10.1% p.a
e) Wellington: 10.3% p.a
f) Christchurch: 10.8% p.a.
Beware that past returns is not indicative of future returns. However many people ignore that investment warning.
Also here is an interesting snippet from the above video - the property industry insider becomes a buyer at or near the peak.
1) https://youtu.be/j4M67KcLdmk?t=605 - bought due to fear of missing out (FOMO)
2) https://youtu.be/j4M67KcLdmk?t=867 - is she in negative equity (that would mean a 100% drop in her equity due to leverage used to finance her purchase)
The buyer is unaware of the difference in future financial outcomes of Peaker vs Buyer Today as illustrated previously. She doesn't know what she doesn't know.
A buyer in Nov 2024 (i.e rent for 3 years from Nov 2021 and buy in Nov 2024), of a median house price in Auckland, is better off by an estimated $827,000 over the lifetime of the 30 year mortgage by paying less for the residential dwelling, and taking on a smaller mortgage compared to Peaker.
A concept/question I’ve been asking on here in regards to peoples faith wrt CV’s is/was :
’we’re house prices in Ireland 50% overvalued before their market crash or 100% after - or neither of the above’.
And:
’if valuations can be incorrect by as much as 50-100%, what value do they really have?’
Eg in Wellington were CV’s 30% out of touch with reality in 2021 or are by the same amount now? (Ie around 30-40% undervalued if the peak was the real correct valuation for these homes)
And why would we put any emphasis on a product that within 12-18momths can be up to 30% wrong?
ie I think my house is worth X amount but in reality it might be worth (X - 0.3)
If RVs went down by an average of 20-30% it would have no impact on rates income whatsoever.
Your rates would only go down if it was just your RV that went down and everyone else's stayed the same. Sometimes people will challenge their RV because it is out of step with other houses around them of similar value and this can lead to a rates reduction if the council agrees.
If all RVs go down or up it makes no difference. The total rates take stays pretty much the same, it's just divvied up by RV value of houses. If the average RV went down by 99% you would still have to pay the same rates.
And why would we put any emphasis on a product that within 12-18momths can be up to 30% wrong?
Yep. If you applied that to any other asset class, expect much scoffing at the BBQ.
However, it's something unique to property in that you have many kinds of artificial valuations (constructs).
"Buyers will most certainly be anchored by the new RVs though"
Exactly. CV may influence some buyer expectations.
Whereas a real estate agent's current market appraisal strongly influences the vendor’s price expectations (and the buyer doesn't get to see this number)
Hence different price expectations between vendor and buyer.
The selling price doesn't change with the CV/RV. The house will sell for what its worth, the RV was low on mine at the time but I paid what it was "Worth to me" at the time. I went $50K over the last bidder to meet the reserve, it was irrelevant I was going to buy the house as its my dream home.
The CV just serves as a reference marker. It's only of some limited use when trying to determine if house prices are rising. For example if in February 40% of sales sell over the CV and then in December 60% of sales are over CV then it may indicate something fairly general. For individual sales it is almost meaningless and shouldn't be used to determine the price as it is just a council rating tool.
What Rookieinvestor is saying is that the reference level will change and the trend starts again from that point.
AC/DC Hells Bells (a old vid, young group)
Play it loud... nothing like a decent air con cab in a big tractor with AC/DC Playlist on....
off to cut firewood...
Damnit Gecko, reading this & now I want to play...
DGMs “prices to crash-dive in ‘25”
Spruikers “property to thrive in ‘25”
Neutrals “these dicks are gonna argue to ‘26”
I still think its a 🚴🏻, but maybe it isn't, who knows...🤷🏻♂️
Regardless, I do love the rich tapestry of your comments though NZG!
I think it is enough for me to finally pay my subs come March 👌
The fools, who plonked their entire wad on the property roulette "wheel of unfortune" - over the last 5 years will be strung out in the dry desert, by paying over 4xDTI.
They will learn a lesson in the perils of financial speculation, that will last their lifetime.
It's a lesson that requires a hell of a hangover!!
Buyers today, should only offer and pay, within the 2015 to 2018 valuation range.
As seen in recent years, NEGATIVE EQUITY is a biatch!
https://www.trademe.co.nz/a/property/residential/rent/wellington/wellin…
Student flat within walking distance of Vic Uni available for rent at $800 per week. Down from $940 per week in 2020.
RV in 2021 $1.78M
RV in 2025 $1.25M
Homes.co.nz sale price estimate $1.12M
Estimated mortgage cost at 5.49% (80% LVR) is $1,270 per week. Rates $8,626 pa.
Dont all rush out now.
20.7% of the rent is required to cover the rates, then there is insurance.... (as rates are increasing faster then rents... one assumes this situation will get worse for a few years...). Rates are bad in Auckland, but seem worse in ChCh and WGTN. Anyone believe WGTN is being well run right now?
how much you guys reckon for insurance?
At least its well maintained and well modernized... chortle chortle, no photos of the iron roof, probably because its rooted.
That owner should have got out at the top...
On a yield basis as an investment you would need to get this between 500-600k to make it worth buying, right now the owner is having capital pains.
Not only that, but its sitting vacant due to Labour's removal of the ability to terminate leases at the end of the fixed term. This would normally have been advertised at the end of last year, so students can be organised and have somewhere to move in to when they arrive for the start of the 2025 term. Now it cant be advertised until after the old students give their 28 days notice - resulting in the landlord missing the incoming student tenant pool entirely.
So you can knock off $800 income for every week it sits vacant.
lets say you bought this for 600k
Your loan Loan amount $480,000
Your ongoing repayments $2,633 per month on 18 months fixed rate of 5.19% p.a. ASB Cal 30 year term
you get 800 per week 41,600 less rates 8640 and insurance 2000 (luckily its well maintained...)
this gives you 30960 to pay mortgage ie 2,580 to pay the mortgage each month a
SHORTFALL OF $53 a week!
This shows you how out of whack things have become.
current home valuation would need to fall by almost 50% to make this house cashflow neutral
"SHORTFALL OF $53 a week!"
Capital gain oriented investors may be willing to pay that. ($53 / week shortfall assumes P&I). This is $2,750 per year. Some capital gain oriented buyers were topping up by over $10,000 per year ($200 / week)
"Your ongoing repayments $2,633 per month on 18 months fixed rate of 5.19% p.a. ASB Cal 30 year term"
Remember non owner occupier buyers are using interest only loans. On a $480,000 mortgage at 5.19% p.a, the payment is $24,912 per year ($2,076 per month, $479 per week)
That is a difference of $6,992 per year ($582 per month, $134 per week). The property is cashflow positive on interest only financing terms.
That is why non owner occupier buyers are outbidding owner occupier buyers.
"I suppose you're hung up on the term "cash flow"?"
People are free to choose to focus on "profit" or choose to focus on "cash flow"
Some who focused on "profit" are now in cashflow stress - or may have faced receivership, liquidation or bankruptcy of both the company and personally. If you want specific examples, look at the businesses who have been put into receivership, or liquidated by liquidators in the past few years. There are many who focused on "profit" who are now in the financial graveyard.
The market was flat in 2024, and it will remain flat in 2025. Every week there will be stats from B&T showing clearance rates of around 40%, and every month stats showing the values in each region going up or down nought point something per cent. Doom and Gladness Merchants will say their piece, and the Spruikers will retort as per usual.
NO DROPS SHORTFALL OF $1240 a WEEK current holders of BAG WEEP HERE
you would need a before tax income of $97k to pay this... assuming you used 100% of it on that allocation....
lets say rates get to 4% (Rockie don't wet yourself) $2,292 on your floating rate of 4.00% p.a. 30 year term and 600k purchase ! you have left over $288 a week yeehaa, but thats if you get it for 600, you guys say no drops so lets say 1mill purchase at 4%
800k mortgage 200k deposit Your ongoing repayments $3,820 a month on your floating rate of 4.00% p.a. 30 year term shortfall is $1240 a WEEK
I call BS on your prediction that prices go up 20% as it would require
$4,775 on your floating rate of 4.00% p.a. you have run out of greater fools guys
TA is not kidding when he says the numbers do not work yet (he forgets to mention the 40-50% from here falls required to make them work)
Developers offering non cash incentives to buyers rather than lower prices.
https://www.rnz.co.nz/national/programmes/checkpoint/audio/2018974922/p…
https://www.rnz.co.nz/news/business/541881/why-developers-are-offering-…
Note lowering sales prices by developers lowers the most recent comparable transaction on the developer's remaining unsold inventory. And price expectations from future buyers.
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