Professional investors never left the housing market, although newcomers have been exiting over the last year, says Sam Steele, Ray White’s lead auctioneer.
Steele sold a five-bedroom home on Fellbrook Street, in Manurewa, Auckland, last week under the hammer to an investor for $685,000 - $155,000 under the 2021 CV of $840,000.
The property had five registered bidders and sold within the realm of expectations, he says.
The home was tidy but needed upgrading to bring it into 2023: “It was a property that it was either going to sell to a family, who would renovate it, or it was going to go to an investor, who would do the same.”
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He says while professional investors have remained active in the market, many people who jumped in when the market was strong and money was cheap have since left.
“What we certainly saw during the boom is that we had a lot of people who had a lot of equity in their own property so they went out there and decided to either buy an investment property or to buy something else.
“You saw a lot of those sorts of people and because money was so cheap a lot of people could afford to do it.
“A large majority of those people have left the market but seasoned, professional investors are still there and they are still very strong.”
The auction market is in a bit of a strange period, Steele says. While traditionally not a lot of properties come to auction in January, this is the busiest January Steele has seen in terms of auction bookings.
A lot of Auckland properties are passing in, but others are selling, such as a three-bedroom brick and tile home on West Fairway, in Golflands, which sold this week for $1.75 million.
That was a pre-auction offer and was not challenged at auction.
“One thing we've definitely noticed is we've had a large number of people making pre-auction offers with the auctions being brought forward or potentially brought forward,” Steele says.
The auction for this three-bedroom brick and tile home on West Fairway, in Golflands, Auckland, was brought forward after a strong pre-auction offer. Photo / Supplied
That could be a hangover from people who missed out last year and have been busy over the Christmas break looking for something and keen to jump in before another OCR increase next month.
But banks are also affecting some people’s abilities to buy at auction.
“With the interest rates that have gone up what has coincided with that is the amount people can borrow has dropped quite significantly as well, so it's not really the access to funds, that hasn't changed too much, it's the amount that people can afford to borrow.”
Murray Smith, an auctioneer for Barfoot & Thompson, says owners are still setting reserves too high. “Owners probably need to have a harder think about just how far the market’s moved.”
He says owners read the news but often by the time data becomes news the market has moved further.
While owners take into account the market has dropped and reduce their price a bit, “they never quite take enough off - that’s the big thing.”
It’s a natural human trait to always want a little bit more but expectations can be too high: “They need to have a look at that if they want to sell.”
A success story this week, though, was the sale of a property on Walter Strevens Drive, in Conifer Grove, Papakura, to first-home buyers.
The three-bedroom, one-bathroom home plus a self-contained one-bedroom, one-bathroom apartment, on a full site with a freehold title, sold for $950,000, under the $1.2m 2021 CV.
Smith says the new owners were determined to get into the housing market.
“It was a young couple who bought it and they were really, really, really stretching to buy a home, they were doing their absolute best to buy it,” he says.
“The owner did want more so a lot of the time in the sale was explaining to the owner that this was where it's going to be, that they [the buyers] didn't have any more money.”
A home and income property on Walter Strevens Drive, in Conifer Grove, Auckland, sold to first-home buyers. Photo / Supplied
Other would-be buyers of the property were around but some had not had their bank loan approvals through, says Smith, who says Auckland’s auction scene is still quiet. “In a funny way, Auckland’s not really back in action, so not a helluva a lot of auctions have happened.”
That’s partly because parents have children not yet back at school and there are two long weekends coming so auction volumes are not big, but Smith says they will likely kick in again next month, adding that open homes have been seeing strong numbers through.
Bayleys sold a stylish two-bedroom property on Shelly Beach Road, in St Marys Bay, Auckland, for $1m after a pre-auction offer brought the auction forward.
National auction manager Conor Patton says auctions have been quiet but not unusually so for this time of the year and of the limited options available several properties sold, including in the south and the north of the country.
A property in the Lake Hayes Hayes Estate, in Queenstown, sold for $1.3m and in Northland, a home on Tauraroa Road, in Whangarei Surrounds, sold for $1.087m.
Patton says while auction numbers are not big, agents are reporting people have come back to the market earlier in the year: “People do seem to have been getting back into decision mode earlier.”
He also expects the numbers to crank up soon and says campaign booking numbers are looking solid.
