While economists and real estate agency heads say the property price boom is over, they are keen to emphasize that there is no crash, but a return to a normal balanced market.
That is being borne out in auction rooms the past two weeks.
Bayleys national auction manager Conor Patton said that while November’s auction success rate of 72% was slightly down on the past three months' average of 77%, it was still well above the long-term rate.
“The last four or five years, auction success rates have been around low 60%, so what we’re seeing is a return to that, and that’s normal,” he said.
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Patton said there were fewer pauses at the top end of the market where buyers had discretionary income and good listings were rare, but those in the $1.5 million to $2m range know they have more choices this month.
Bidders are still paying good money for stand-out properties at the company’s auctions, particularly at the higher priced segments.
The inside of the renovated Devonport bungalow. Photo / Supplied
Last week, a striking luxury six-bedroom property on Church Street in Devonport fetched $5.97m under the hammer. Bidding on the transformed 1930s bungalow blew past the opening bid of $4.5m (the house had a 2017 CV of $3.5m) and in less than five minute the hammer came down. Pre-transformation the property with unobstructed harbour views had sold for $1.85m twelve years ago, OneRoof records show.
Similarly, a three-bedroom house with a swim spa and views of the estuary on Rosario Avenue in Red Beach fetched $430,000 more than its pre-auction offer, with the hammer coming down at $3.63m. It last sold four years ago for $1.5m.
Patton added that the number of properties coming to auction was still building up through December, which gave buyers more options and a better negotiating position.
“We feel like the peak has fully hit; people are getting on to the market. Of course, once people start talking about a peak, it means it’s already hit and passed.
“But we’re still busy. December we’ve already booked 27% more auctions than November, and that’s a shorter month. We’re up 64% on last December, and that was a busy month too.”
He said some vendors were looking at the big prices of a month or so ago (what he calls “the FOMO height”) and thinking their property should get more than that, while others were happy to test the market and pass-in at auction if they didn’t get the big numbers.
“Some owners get it faster than others, there are fewer buyers and more stock, sometimes only one bidder at auction.
“Buyers are a bit more choosy, they’ve got the sense they don’t have to grab.”
The view from a property on Rosario Avenue, in Red Beach, Auckland, sold for $3.63m. Photo / Supplied
Daniel Coulson, Ray White’s national auctioneer, agreed that November marked a turn around, but still on big numbers.
The company reported $2.33 billion in sales, $1.62b of that in Auckland, up 26.4% from November last year. With 3117 listings added in last month, the company currently has 4223 properties on the market, its highest inventory in two years.
“It’s the first time in 12 months that it’s obvious that more listings are coming to market, and that we have more listings than transactions and are starting to replenish inventory,” Coulson said.
“That’s the normal we need, there’s a bit more balance in the market and that’s nationwide.
“We were in a situation where we were going at king tide, now it’s just sitting at normal high tide.”
Coulson said that buyers were now confident that if they missed out on a property at auction, another would come up at a similar – not increased – price so there was less pressure to compromise.
That said, some properties were passing in. However, auctioneer John Bowring said that after not selling under the hammer, many properties were getting multi-offers immediately afterwards.
“Agents are telling me banks are making it really difficult to go into an auction in a position of strength,” Bowring said.
“It’s also difficult for agents to say what a property is worth. In a market with changing competition, the information you have may be a month or two old.
“Four weeks is a long time in the property market, changing competition changes everything.”
Coulson said that vendors were starting to make informed decisions, sensing the market shift.
“It’s the normal we needed.”
In Christchurch too, Harcourts auctioneer Mark Morrison said the market shift was more obvious to punters.
“We’d been in a bit of a gold rush for the last 12 to 18 months. We’d been sensing a bit of a change building over the last two to three months, and it’s definitely here now.
“It’s balanced and normalised: a key factor is there’s more stock available. FOMO is self-fulfilling, and people were genuinely desperate but now there is enough stock. The middle market here of $700,000 up to $1m is still strong.”
Morrison said that price growth was flattening, as the number of bidders dropped from a panic-driven peak of five, even eight to 10, to one or two, and clearance rates were returning to a more normal 60% to 75% from a high of 95%.
“People are feeling that it’s still a wonderful market, it’s not the unsustainable rock-star market. We like that it’s more sustainable.”
