By Greg Ninness
There are tentative signs the substantial decline in the number of Auckland properties being auctioned may have bottomed out.
The table below shows the number of Auckland residential property auctions monitored in interest.co.nz’s Residential Auctions Results page from March to August this year.
This captures the majority of residential auctions in Auckland but not all of them, and includes most of the properties auctioned by Barfoot & Thompson, Harcourts, Bayleys, Ray White City Apartments and City Sales.
It shows that the number of auctioned properties declined steadily from 1452 in March to 628 in July and then remained virtually unchanged at 630 in August.
It’s probably too early to say that the flattening out in numbers that occurred in August was a turning point, and early indications are that auction numbers for this month are still very weak.
However the percentage of properties that were being sold at auction (either under the hammer or within a day of the auction) also took an interesting turn in August.
From March to July the sales rate was remarkably consistent at 37% to 39%, then in August it jumped up to 45%.
Again, one month’s figures do not make a trend, but taken together, the flattening of auction numbers in August and the lift in the sales ratio might suggest that the recent downturn has bottomed out, or is close to doing so.
Anecdotally, we are hearing reports that vendors are starting to accept the fact the market has cooled and are being more realistic in their price expectations, and that will help properties to sell.
However we do not expect a return of the frenzied auction activity that characterised the Auckland market until late last year, at least in the short to medium term.
It is only in comparatively recent times that auctions have played such a major role in the Auckland market.
A general rule of thumb used to be that selling by auction was a good option for exceptional properties for which there was strong demand, and those that were auctioned tended to be at the top end of the market.
But then with Auckland’s growing housing shortage, the influx of Chinese capital that poured into Auckland’s housing market over the last few years and mortgage interest rates at record lows, it was as though almost every property started meeting that criteria. And auction room feeding frenzies ensued.
So perhaps the new normal for auctions is just the old normal returning.
But we are living in very interesting times.
One way or another our political landscape will have changed by the end of this month, although it could be weeks after that before the final shape of our next government is known.
How that affects the traditional spring surge of the property market, we will have to wait and see.
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