The auction rooms are starting to get busier as the real estate market gets back in to action after the Christmas break.
In the week ending 25 January Harcourts offered 45 properties at their major auctions around the country, selling 25 of them and those numbers should increase significantly over the next few weeks.
In Auckland prices four of the 10 properties auctioned were sold, with prices ranging from $707,000 for a two bedroom home unit in Browns Bay to $1.257 million for a house in Murrays Bay.
In Hawke's Bay nine properties were auctioned and 3 were sold, with prices starting at $380,000.
There was also a handful of auctions in Taupo but all were passed in and in Christchurch five of the seven properties offered were sold.
However Harcourts main auction activity for the week was in Central Otago/Lakes where 15 properties were auctioned with sales being achieved on nine of them.
These included a number of sections in a development at Albert Town that went for $270,000 to $285,000.
The Auckland apartment market remains quiet with just a few properties being offered, although there was extremely competitive bidding for the only apartment on offer at Ray White City Apartments' regular Thursday auction and it sold under the hammer for $423,700.
The prices achieved for individual properties sold at auction and details of those that didn't sell, are available on our Auction/Sales Results page.
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81 Comments
It is not the interest rates that is affecting the market at the moment at all.
It is the ridiculous 40 per cent deposit required for investors and that is just not on new buying but also on existing borrowings.
Believe the Banks have misinterpreted the Reserve Banks LVR requirement.
'It is the ridiculous 40 per cent deposit required for investors and that is just not on new buying but also on existing borrowings.'
Oh you poor darling...you might have to do something useful with your time instead of buying up the 'houses' that families would like to buy and turn into 'homes' but they've been priced out by greedy landlords...what a shame!
Last year people were laughing off the 40% equity requirement. Mostly because a lot of investors easily had the equity in their portfolio. The slow down in Auckland sales just seems to be the Chinese investors unable to send money externally without big fees and risks.
If the price of houses falls that makes it easier to get the 40% together as well (assuming the investors are operating like a business). It also leads to better return on investment.
I could see speculators panicing and trying to dump properties because they will be crying over disappearing capital gains.
If people look pretty safe in their position the banks will let it slide for a while. If the banks get worried they will ask for a top up or ask that the property be sold. I know investors that have been forced to sell to keep the bank happy with their position.
Unfortunately I suspect there is a problem brewing. If the Chinese money tap has been turned off that could produce cash flow problems with developers or banks.
Perhaps the RBNZ and the banks are just protecting you from your own stupidity. The banks are not bound to lend to anyone, they can make their own rules as to whom they lend and at what rate. If they don't like the risk they either don't lend to you or at a higher interest rate.
Actually 'the Boy' it isn't even that (local Investors 40% deposit) that's causing the property market to crash, it's the lack of foreign buyer since they have been locked out of the market due to China's Capital Flight restrictions which happened in November 2016. If it had been the effect of the 40 percent deposit restrictions on local Investors we would have seen the property prices fall a year ago in Auckland.
But these price falls and poor auction results happened at the same time as the clamping down on Capital Flight from China.
CJ, stop talking about things that you don't understand...40% LVR's have choked the NZ market to unconsciousness...nifty Chinese will always get their money out no matter what big brother tells them...the Chinese (or any foreign national) now are coming in over the local investors and FHB like they always have and always will...
Hey Zachary (Double-GZ), You know it's going down we can all see it. Your top foreign buyers have flown the coop, gone bye bye. I'm estimating at least a -20% drop for Auckland and a lot lower for the provinces.
And don't think that Auckland is going to be like other cities such as London where prices plateaued for a few year then climbed back up. Guess who propped up London's high prices during the GFC in 2008, yes that's right our wonderful foreign buyers.
Go and look at the graphs in the attached link - figure it out its staring you in the face! http://www.telegraph.co.uk/business/2017/01/02/fears-massive-global-pro…
And then think how much Vancouver's sales have dropped since they introduced their more harsh Foreign Buyer tax, I'll think you'll find that it's similar results. So yes mate we are slowly crashing.
This is what happens when you sell out your country quite literally to the 'highest bidder'!
In a sense the market is starting again. Have a look at the mortagee sale. 480 m2, 5 bedroom and apparently whoever owned it was living well beyond their means. Noted 2 SUVs in the photo, and another mortagee sale on trademe has a BMW parked under the car port.
There's nothing like borrowing to keep up appearances while your finances go down like the titanic.
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
Mortgagee Sale at Polo Prince Drive Alfriston Manurewa
Extreme extravagance ... foolish to live such a lifestyle where you have to go into hock for it
Breathtakingly furnished. OTT. Is that common in NZ nowadays? Is that the kiwi style?. I was away too long. I have known and been the guest in the homes of many wealthy people over the years ... but nothing like that ... just to build that would have to be near $2 million ... the furnishings and objects d'art alone must be in excess of $200,000 if not more ... window coverings $50,000 at least
What culture is that? South African?
I have a knack for finding the worst. The furnishings are a display of poor taste but it's uncommon in the listings I've been looking at. As more mortgagee sales come on the market we'll no doubt see many hilarious lifestyles of pure excess and financial recklessness.
It's not an example of the kiwi way. I'm assuming the car port entry was an add-on. The money from that, the tacky statues and furniture could have been poured into the mortgage, but why wait and save when you can borrow instead?
looks like someone involved in buying and selling properties , guess we will see more of these if the market declines.
there a still property "mentors" hyping the buy revalue leverage and buy again model, which worked like a dream in double digit increases.
only problem which using leverage that cashflow does not cover expenses is when the market stop rising or decreases the model falls apart
Buy and revalue can work provided the property results in a profitable cash flow. Of course when things are too tight and there's no cash buffer things can turn bad quickly.
So this mortgagee sale is the end of someone's property empire they've been building for 17 years. There must have been some really bad decisions to fail at that point. No doubt there are more of these in the works.
more likely started to believe all the hype and they were world renowned experts, I'm sure the RE and lenders would have been falling over themselves to sell and lend being their besties.
now they will find out who their real friends are
unfortunately they are now most likely learning about economic cycles
just went to a few open homes in Cambridge and there seems to be quite a few more people looking now.Nothing like last year but definatly more than before x mas.One three bedroom house five years old has a contract on it around the 900k mark.So there's still people out there that have confidence in the market.I'd guess if it dosnt pick up this month it never will.
Independant observer, we need investors as they provide housing for people that can't afford or want to buy.
Personally don't need to buy anymore as they already provide more than sufficient income.
The other thing at the moment in Chch is that I have never seen so many less than average clientele looking for places to rent.
You have to be on your game to make sure you do the right checks
Given that property investors are such good samaritans, providing housing for people that can't afford it - why don't you provide schooling and food for these same people who are clearly so poor (and stupid) that they can't care for themselves?
Now that would be beneficial. Oh but lets be clear about the truth of this - you're not really in it for the good of society. You're in for the good of your bank account. There's a significant difference.
Yes there has always been urgent sales, some genuine some not, the reason your noticing it more is partly because of the slowdown and the talk of house falls, Auckland is growing to be a super city, with or with out the help of investors, sure the investors have added to this process, yes there is a slow down at the moment but rises are inevitable despite current and future restrictions, population growth will see to that. Auckland properties are still cheaper then other super cities close by.
No one has said that property investors are heroes but they are needed.
People that run many rentals are running a business no different to any other business.
If you want to invest in property that gives good returns then go for it and no need to be envious of people who wish to invest, end of storey
It is not a business as any other, because of far, far more favourable lending conditions for people buying houses than people buying or starting a proper business. Level playing field and I bet there would not be such a clamour. I reckon we start with existing houses, no more investors buying them, and go from there.
I don't think its OK for the country to be so relying on these "investors" because look at whats happening. If the price of water went up like houses have, or food...... it would be morally wrong. Well housing is a human need also, and it should not be getting to the point where families are living in cars or garages..... And part of the reason is because of speculators and "investors".
Cobblers.
In NZ with its welfare system there is no need to be living in cars or garages!
If people are doing this then they have made very bad choices!
Why should the country continually subsidise people that continue to have children when they can't afford them or have medical conditions brought on by their own bad decisions?
I know there will be many that will have a go at The Man but sometimes the truth tends to hurt!
Some should have a look at overseas countries that don't have any sort of welfare system!
Yeah I'm sure families love sleeping in cars and garages. Get real and stop hiding behind that bible. You know it really pains me when I see homeless people on the streets. I saw one old lady begging on Queen Street (Auckland) yesterday outside some glitzy store, when I was on my way home from work.
She certainly wasn't a druggy, she was just HOMELESS! I can tell you I was certainly welling up with tears when I gave her every bit of change I had. This situation did not exist a few years ago.
And let's start that welfare reform with abolishing the accommodation supplement, eh, The Man2?
https://www.workandincome.govt.nz/products/a-z-benefits/accommodation-s…
Sometimes the truth tends to hurt.
the accommodation supplement is just bad policy, whilst the intention was to help those with little money to afford a roof over their heads the reality is
it has pushed rents up acting as another lever to make investing in rental housing attractive which has in turn increased demand for the lower ladder of housing pushing the prices up turning potential owners into tenants
rents are the same as everything governed by supply and demand, you can only charge what a tenant can afford, so add a supplement and you can charge more.
and as of last year it was 3 billion per year spent by our government taxes to private providers
We as a society need to redress the situation so it is easier and more attractive to be a owner occupier, sure we will need rental stock, but that only needs to be 20% of the total stock
take the 3 billion and spend on a mix of state accommodation and building low cost, cheap loans for NZ citizens FHB
yes it is possible , we stopped subsidies for many industries back in the day, i.e farmers, car production in NZ
there was short term pain but we are better off now
because it is complex I would phase out slowly, cap then reduce to nothing over a number of years
whilst setting up a massive building problem to supply a mixture of state and FHB homes
so the two run hand in hand.
also I would reduce immigration to a total number of 25K per year
if we leave as is the government tax spend is going to increase year on year with the benefits being received by fewer and fewer people and we could turn the clock back do we want a country with landed gentry?
Yes, staged reduction so there is time for the market to adjust (i.e., for rents to decrease, wages to increase and property owners to relinquish non-performing assets) - a bit like the tax on smokes but in the reverse. So, the government would likely announce the intention of A/S reductions over say a three-year period - in addition to increasing existing tenancy/occupancy and rent/price protections over that period.
Accommodation supplement was put in place to avoid situation where lower income earners with a state house were advantaged versus lower income earners who did not have a state house. Essentially situation was, if you had a state house rent was capped at 25% of income and if you didn't you had to fend for yourself. I would expect an increase in homelessness if accommodation supplement was removed as a significant proportion of the population would simply be unable to afford market rents.
Seems we have a few do-gooder types who don't live in the real world, ie they live in the world of, if we remove accommodation supplement rents will immediate fall and the world will be a better place with no collateral damage. These people are also known as IYIs (intellectuals yet idiots)
TM2 - You are part of the problem, you took the easy route to making a buck as a property investor (speculator) then come all altruistic here on this forum as if you are doing your tenants a favour; oh they would be rotting in a camping ground or in the back of a van without my beneficence. You are one of thousands who distorted the market to no ones benefit apart from your own. Regard is best directed to those who have tried to make a go of businesses that have provided jobs for other kiwis.
Not part of any problem.
All of our properties we have purchased at under market value at the time and have not forced up prices of other properties at all.
If our tenants thought we were charging too much then they have the option of renting someone else's or even buying, it is their choice.
You have to say they were bought under market value ( and of course we all believe you as you are a valuer amongst other things) as they have dropped in value since you bought them and will continue to do so as rents drop further in Christchurch and interest rates and other costs continue to rise. If you in fact own property in Christchurch and you say you are positively geared just as well as you certainly cannot rely as on capital gain to help your cause.
Spent about 5 minutes looking through Manukau / Papakura properties listed online, didn't take long to find someone that has missed the boat, asking $679k (listed in November!), bought in Aug 2016 for $685k, changing hands a total of 4 times in 24 months. I get the feeling this is the tip of the iceberg
http://www.trademe.co.nz/Browse/Listing.aspx?id=1197554576
https://www.trademe.co.nz/property/insights/address/Papakura/Papakura/V…
Valentine Street, since as long as I can remember was and probably still, is in the absolute worst part of town. Well over half a million, closer to 3/4 for another? Something is very, very wrong as that area still, by and large is the low end of town. You'd want to looking around the area before stumping up with that much money. This is crazy.
Leverage is great on the way up, its also as relentless as terminal cancer on the way down.
The investor debt ponzi with property after property stacked on each other require one single constant - climbing equity position/values. This allows the banks to lend on the next house as overall equity rises. Take away the major catalyst of rising house prices -chinese money -what is left to pump prices...certianly not rent or return on investment ratios. Once the specuvestor has maxed their debt, they are dead in the water with nothing but increasing downside risk in their future.
Summary - the specuvestor has been a parasite enjoying the free ride of chinese buying and cheap interest rates. Looks like that free ride is over. Smart money corrected its debt/income ratios last year and is primed to ride out the next five years.
Dream on Hellomatt, things will tumble far faster than that! China has to contend with Mr Trump now.
https://www.bloomberg.com/news/articles/2017-01-03/china-drills-down-in…
Hi CJ099, as I said, it's too early to assume anything. It is tumbling softly now. Yes it can build momentum depending on Trump policies and gobal factors. Fact is Auckland is a city desirable international and it's growing strongly. It's a good thing CJ099. There are affordable housing for average income New Zealanders in Auckland. Be realistic and adapt :)
There is an under supply of houses, when I put my places up for rent is a very interesting exercise on who New Zealanders are: truck Drivers, retired Teachers, Engineers etc all vying for the same place, probably get 15 applications, house prices are going nowhere but up as did all my rentals last month! With interest, rates and insurances all going up higher than inflation all my rents have too...
unlike yourself I don't have to worry about squeezing money out of tenants, my investments are in productive enterprises and have paid for my house debt free, its out goings and provides a passive income.
try it sometime, opps sorry you need skills and knowledge something out of the reach of most landlords
The left be strong in you, we are getting squeezed Everyday by everybody (have you met my Wife and boss and the guy that runs my corner dairy) anyhow Glad you have some rose tinted sunnies and the next time you want me to dance around the fire singing Kum Bai Ya with you just let me know, p.s if there are no private landlords where do you propose all my wonderful tenants of mine live so they can work in your productive businesses, saying a business is more productive than a house is like saying your car can go really fast without a windshield, is called a business and social Eco system, and luckily for now not one run by greedy socialists
Keywest, I sure hope you don't show this attitude to your tenants!
Of all the diverse professionals on this website, and among all the comments that I've read over the last few years, I really can't think of another profession apart from a few of the landlords who talk about their customers/clients (you know, the ones who pay the bills and provide the cashflow) with such smugness, boastfulness, thinly-veiled contempt, and pride in price gouging.
To quote Mark Baum's character in The Big Short:
Let me ask you this: What company treats its customers that sh*ttily and succeeds?
Fine... ok... Goldman...
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