Buyers in Wellington this week got competitive for two unlikely properties: an abandoned three-bedroom house in Stokes Valley and a non-compliant four-bedroom family home in the capital.
Bidding on the rundown Stokes Valley house, a mortgagee sale, was fast and furious, opening at $300,000 and ending 15 minutes later at $498,000 - more than $100,000 below what it sold for in 2019 and nearly $250,000 below RV.
The house on Redwood Ave, in Tawa, marketed as "detonate or renovate", fetched $520,000 after bidding kicked off six minutes earlier at $100,000.
It too sold significantly below its RV, which was set at $1.4m in 2021.
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For two flawed homes to sell above expectations in the middle of a market downturn was surprising. Even more surprising is that they did so in a region where buyers and sellers tend to avoid auctions.
Several agencies in the regions have told OneRoof that this antipathy towards auctions is changing. Bayleys Wellington manager Grant Henderson said it was a sales method they were pushing - and it was having results.
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Currently, about 22% of Bayleys Wellington’s properties are being sold by way of auction, but Henderson said they wanted to grow this number and were planning on moving from holding auctions monthly to fortnightly.
The auction process helped flush out the cash buyers and if a deal couldn’t be done on the day, then they moved to the second phase when they opened up to conditional buyers and a price was put on the property due feedback given during the auction campaign, he said.
“At the moment in today’s market buyers want transparency, vendors want a cash unconditional offer, and the agents need to know who the buyers are and where they are – it's just too easy to hide in other methods of sale at the moment.”
The latest REINZ figures show 4.72% of all Wellington’s residential property sales in February were sold by auction compared to just 2.56% the same time last year.
And despite the number of sales and the values dropping, 19 properties were sold using the auction method last month, up 35% from 14 in February 2022.
Nationally, the number of properties sold at auction made up 11% in February, but the number of properties sold under the hammer dropped by a whopping 62% from 1245 to just 464 year-on-year.
A property in Redwood Avenue, in Tawa, sold for just over $500,000. It needed remedial work and a Code Compliance Certificate. Photo / Supplied
Ray White lead auctioneer Sam Steele said they were seeing an increase in the number of properties being sold via auction in Wellington with 75% more being sold by this method in February compared with the same period in 2022. Of those called at auction, about half sold on the day.
“It’s going to be a lot lower than what any other region is, but the fact they are increasing is certainly very, very positive.”
Steele put the increased interest in auctions down to people wanting to try something different in a changing market.
“It’s a market where auctions haven’t traditionally been strong, but we’ve seen lots of markets around the country where 10 or 15 years ago auctions weren’t prevalent, and they are extremely strong now so whether Wellington heads down that track is yet to be seen.”
He would always recommend auctions as the best way to sell, adding the data “empathetically” showed that auction is both a more successful and quicker method of sale.
In a rare move, Ray White agent Ben Stevens decided to take a four-bedroom lifestyle property on Bing Lucas Drive in Tawa to auction last month in an attempt to create competition for the unique property.
The move worked as 19 bidders fought it out for the property that eventually sold under the hammer for $2.79 million – above the RV of $2.47m and $190,000 more than the owners had been prepared to accept.
This luxury home on Bing Lucas Drive in Tawa attracted 19 bidders when it sold at auction last month for $2.79m. Photo / Supplied
“It’s a lot considering where the market is, most sales are happening below CV,” he told OneRoof at the time, adding that bidders had budgets from $2.2m upwards.
Harcourts had also seen an uplift in the number of auctions called in Wellington.
Harcourts national auction manager Shane Cortese said the increase was due to people wanting unconditional sales that were guaranteed at auction as this gave people the opportunity to close off chains.
“They are definitely seeing an uptake and the reason they are seeing an uptake is because there is a greater understanding of what an auction is as opposed to a sale and purchase agreement on a tender which can be renegotiated at another point in time and is conditional on everything favouring a buyer.”
But Tommy’s principal Nicki Cruickshank, whose agency had the biggest market share in the city, said tenders continued to be the preferred and predominant method of sale for the last 20 to 30 years and were basically “private auctions”.
“We would do auctions if they worked here because obviously, they are better for the agent because it’s an unconditional sale on the hammer.
“But Wellingtonians are quite private types of people, so they don’t want to stand at an auction room and have everybody knowing how much they are paying for a property ... or equally what they are getting for their house.”
The four main agencies were still selling by tender, she said, and she had seen very few – if any – advertising auction as the method of sale in Wellington City.
“To say there’s an increase in auctions in Wellington – you might have an increase by three to five – it's just insignificant out of an average of 300 sales a month.”
The advantage tenders had over auctions was that it was a blind process so someone might be prepared to pay another $100,000 or $200,000 more than the second highest bidder whereas at auction the price got set by the second highest bidder, she added.
Like an auction, the offer with the less conditions also had the best chance of winning a tender and sometimes even if it wasn’t the highest offer, it was still possible to negotiate with an unconditional buyer and get them up to or past a higher conditional offer.
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