The head of Auckland's largest real estate agency predicts house prices in the city will drop this month.
Reporting on the company's performance last month, Barfoot & Thompson managing director Peter Thompson said that property sales in March were down 36% on sales in March 2021.
However, the average price of the 1180 sales the agency concluded in March was just over $1.23 million, up 3.2% on February's average and up 11.4% year on year.
“Many market analysts will be surprised by the prices achieved,” Thompson said.
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“There was a definite storyline developing that prices had fallen, but that prediction is a little premature. March sales were right in line with what typically happens at this time of the year as vendors and buyers return to the market after the summer holiday break."
Thompson told OneRoof he expected prices would dip in April.
“Traditionally, April is a quieter month, and we’re predicting prices will go down slightly."
OneRoof analysis of Barfoot & Thompson's auctions over the last four months shows a steady drop-off in the number of properties being sold under the hammer during March.
The number of lots coming to auction in the first week of March hit a 2022 peak of 242, but in the weeks since the weekly totals have fallen to well below 200. This week's numbers suggest a bounce back in vendor confidence with the number of properties being offered for sale under the hammer rising to 198 from 169 the previous week.
Barfoot & Thompson managing director Peter Thompson says March house prices held firm. Photo / Supplied
However, the percentage of properties selling under the hammer or selling on auction day has remained below 50% since the start of the year, dropping to as low as 25% in the last three weeks alone.
Thompson said the agency's sales last month were in line with expectations. “March sales were right in line with what typically happens at this time of year,” he said.
“March this year is more like 2020 or 2019 or 2018. That was all pretty average, not abnormal like the last two years."
He added: “There’s more balance between buyers and sellers now. Buyers have more choice, so vendors can’t expect to get ultra-high dollars, they’ve got to meet the market now."
While figures show auction clearance rates were less than half of last year’s highs of 70% to 80%, Thompson said the around two thirds of properties that were passing in last month were selling after the auction.
“Auction is our preferred method, but bank lending has gone through changes so it’s impossible to get mortgages that need to be unconditional [for an auction]. The majority of listings would prefer an auction in the first wave of a campaign, so we’ll start with that.”
Thompson said that the Government’s red traffic light setting was still restricting activity, with some people “too frightened” to look at properties or attend auctions face to face.
“When they do go through open homes, we’re finding they are more quality buyers, they’ve done their homework and are there with a purpose.”
Real estate agents across the country have reported a drop in number of people at open homes and auctions. Photo / FIona Goodall
The Barfoot & Thompson figures landed the same day as the results of REINZ's monthly survey of real estate agents, conducted by independent economist Tony Alexander.
The survey found that a net 66% of agents reported fewer people at auctions and a net 69% had declines at open homes.
That’s a slight improvement on February’s low, but Alexander said: “Buyers have lost their FOMO and perhaps with caution associated with the rapid spread of Omicron have decided for now to step back from attending auctions..and the market.”
Agents also reported a jump in buyers worried about getting finance and potentially over-paying, with 64% of them saying buyers are displaying price decline worries.
