In years to come, when real estate auctioneers look back on 2021, they’re likely to remember it as the Year of the Frenzy. Some of them called twice as many auctions as in a normal year. Some brought the hammer down on properties that went for eye-watering sums. At many auctions, the clearance rate was 90 percent or more, which is exceptionally high. Even when the country went into level four lockdown in August, the relentless pace continued, with auctioneers adjusting to selling millions of dollars’ worth of property while standing in front of a camera in their living rooms or kids’ playrooms.
As three of the country’s top auctioneers reflect on the year they’ve had, they use words like “astounding”, “phenomenal” and “insane” to describe New Zealand’s property market. John Bowring, Aaron Davis and Murray Smith have nearly 60 years experience between them, and have called many thousands of auctions, but 2021 will stick in their memories for a long time, not least because of the sheer amount of work they got through.
“It was an exciting year, to be honest,” says Bowring, of Ray White. “This year I will have called 1400 auctions which is huge. Properties were flying out of the door. The bidding was competitive and there wasn’t a lot of pausing and negotiating.”
“It’s been stellar,” agrees Davis, of Harcourts. “Proportionately, the auction rate has effectively doubled. Even though stock levels have been low, so many more properties have gone to auction because how to do you price property at the moment?”
Start your property search
In nearly three decades as an auctioneer, Barfoot & Thompson’s Smith has never called as many auctions in one year as he has in the last 12 months.
“This week we are due to do 400 auctions in one week, and that is just one company. That’s a lot. I did 361 new auctions myself in November, and I’ve never done more than 300 in a single month before. Doing more than 250 is good going, but more than 350 is insane. The numbers are huge.”
So are some of the prices achieved. “There were some incredible prices because a lot of people had a fear of missing out,” says Davis. “There have been a lot of stories of vendors making a lot of money. But in a lot of those cases, that money has really changed people’s lives. They have been able to do things like retire early, and that’s an amazing thing to see. People are very grateful.”
Yelling and shouting
There have also been some examples of greed though, Davis notes. “I did one auction a few weeks ago where the guy had bought a place for $980,000 four months earlier and now wanted $1.7m for it. We brought him $1.6m for the place he’d paid less than a million for only months earlier, but he said, ‘No, it’s worth more’. What else can you say except, ‘Okay, good luck with that’?”
While sellers who have pocketed hundreds of thousands – or even millions – of dollars more than they were expecting obviously have reason to celebrate, there were also plenty of buyers popping open bottles of champagne.
“We saw a lot of buyers who had been to 14, 15 or 16 auctions and missed out before they were finally able to secure a property,” Bowring says. “They were very happy when they did.”
Recalls Smith: “I did one auction last week, a house that went for the high $3 millions, that was quite a fight between bidders. When it sold I could hear the buyers through the agent’s phone, on the other side of the room, yelling and shouting, they were so happy.”
Harcourts auctioneer Aaron Davis says the market has turned, on the back of higher stock levels. Photo / Fiona Goodall
The auctioneers say a combination of factors have created the perfect storm when it comes to real estate in 2021.
“There was a real lack of stock on the market, and an influx of buyers with a lot of people coming home from overseas because of Covid,” says Bowring. “A lot of ex-pats came back with large sums of money that they had saved so they could afford to pay more. Interest rates were low, and banks were lending, which people were happy to accept. And they realised they were going to be in their homes a lot more, especially if they’d moved to working from home, so they wanted a nice house. So for some people, making the step from buying a $4m home to a $7m one wasn’t costing them too much more money.”
The market has finally slowed down as we’ve headed towards the end of the year, partly due to more houses being available to buy.
“We’ve got higher stock levels because now it’s sellers who have the fear of missing out – they see that the market is moving so they are selling up,” says Davis. “Auction success rates have dropped from 90 percent, which is unusually high, to around 50 percent, which is actually normal.”
Market fatigue
Smith reckons we’re seeing fatigue in the market, with would-be buyers who keep missing out on properties stepping back for a while. “They’ve copped a fairly heavy battering with prices climbing and now that interest rates are also climbing and banks are bringing in tougher lending rules, they’ve possibly decided to rest until they are ready to go again.”
“We are seeing a more normal market now where we are getting two or three buyers to an auction instead of the 20 we were getting earlier in the year,” adds Bowring. “It is a little bit tougher at the moment but will this continue next year? Who knows?”
All three are reluctant to predict what’s likely to happen in the market next year.
“When we open up the borders and people can travel again, maybe they won’t be so keen to upgrade their house,” says Bowring. “But then we could have more people coming home from overseas once it is easier to get back, and if they want to buy, the market could start to go up again. I’m not going to make any predictions – if the chief economists can’t get it right, there’s no chance I will.”
“I have learned in 15 years in real estate that 50 percent of the time, my predictions are wrong,” adds Davis. “It’s hard to know what will happen but I think 2022 will be a humbling experience in our industry and it will be those agents who are good at marketing and negotiating who do well. The market is not going to put in the energy any more, it will come down to the agent.”
A pedestrian walks past a real estate office in Auckland. House prices in the city have jumped 25% in the last 12 months. Photo / Fiona Goodall
“The market is a lot quieter but there are still people out there looking to buy so it could go either way,” says Smith. “But banks are getting tougher so that will affect how much they are able to spend. I just hope that whatever happens, people continue to have a positive mindset. One of the things I noticed about 2021 is how friendly people have been. We do see extremes of human nature in this business because you are dealing with people’s biggest asset and that can be very stressful. Despite the difficult times we’re in, everyone has been so nice. I hope that continues!”
ON COPING WITH LOCKDOWN
JOHN BOWRING: Lockdown wasn’t as challenging this time around because we had processes in place from the first time round and we were really well equipped and supported, right across the Ray White group. We are back in the auction rooms now, although without bidders in the room, and everyone has adapted well to doing online auctions. When we had to work from home I did my auctions from my kids’ playroom, where I had a screen set up. I’d go in every morning and clear their toys away then get going. I was very lucky because it’s quite a large space.
Ray White auctioneer John Bowring on the golf course earlier this year. He did his auctions from his kids’ playroom during lockdown. Photo / Fiona Goodall
My kids Gigi, four, and Indi, three, weren’t too happy about me taking it over. My understanding wife kept them occupied although there was one time when they wandered in during an auction to see what Daddy was doing. I thought, This could go pear-shaped, and I ended up picking the little one up so people could see what was going on but the bidders seemed to be okay with that – it was real life and people were dealing with all sorts of things while working from home. People were pretty understanding.
MURRAY SMITH: At Barfoot & Thompson we have a very slick online bidding system and we had got used to doing everything from home during the previous level four lockdown so it wasn’t so bad. I’d put up the tripod and a light next to the TV in my lounge, pull the curtains and off I went. It all went pretty smoothly, apart from a few times when the doorbell went in the middle of an auction and it was a courier delivering wine. My kids would usually get it but one time they weren’t there and my wife had to run from the pool house where she was working, past the pool and into the house to get the door. It was a good 50m sprint
Another time I rang a bidder to do some negotiating after the bidding stopped below the reserve and he said, “Before we talk, I have a question. Are you wearing jandals?” I had to admit that yes, I was. I was in a suit and tie and I thought, There’s no need to wear shoes, nobody can see my feet. But he said to me, “I can hear your jandals when you move around.”
AARON DAVIS: Going back to the first lockdown, we were all a little afraid of how doing auctions online would work because it was so new and unknown. But I’ve actually found you can get better engagement with bidders at a live-streamed auction. They’re in their own homes – well, mostly, we have had some people who are in the car on the hands-free, bidding that way – they’re relaxed, they can be having a beer if they want. They don’t have to drive to the rooms, find somewhere to park, sit there for two hours and wait for their auction to come up, so they are less stressed. And they can’t hide online, they can’t sneak down the back or hide around the corner. It’s easier to engage with them in many ways. I did one auction recently where I said to a bidder, “Look at you there on your couch mate, you’re more laid back than a Cadillac seat”.
And it’s been good for us, because we don’t have to drive all over town to different auctions – I don’t miss the Auckland traffic. When it’s online you can call the auctions, have a cup of tea and then do your next one. So maybe we’ll see more online auctions in the future, even once people are allowed back in the rooms.
ON THEIR STANDOUT AUCTION OF THE YEAR
JOHN BOWRING: I had a few auctions but one of the most amazing ones was back in March for a home in Remuera, 6 Tirohanga Ave. It was a beautiful home, there were six registered buyers and the bidding was really competitive. The CV was $5m and that’s where the bidding started, going up to $7.5m. It was a big surprise to get that much, I was very happy about that So were the vendors.
MURRAY SMITH: I had my biggest ever sale under the hammer in 2021. A house in Maungakiekie Ave, Green Lane, went for $9.9m. Usually expensive properties in that range go to tender but when the agent, Linda Galbraith, phoned me wondering if it should be auctioned, I said, “Let’s go for it, there are lots of buyers in that price bracket.”
The Auckland house that broke auction records earlier this year, selling for $9.9m. Photo / Supplied
We had eight people wanting to bid, although six of them never really got a look in. Two people fought it out, and while I was very happy with getting $9.9m for it, I have to admit I was disappointed not to get over $10m. I think I was actually begging one of the bidders when it got close. Still, $9.9m is my best result and I don’t know of an under-the-hammer sale of a residential property that has gone for more.
Another highlight was selling a parking space in Commerce Street for $288,000. I was surprised by that, they normally go for around $150,000. It was another battle at auction and nearly $300,000 was very good for the seller.
AARON DAVIS: One of the standout auctions for me in 2021 was not because of the price, but the effect it had on the vendor. She’d lived in her home for a long time and would have been very happy to get $1,125,000 but we were able to get her $1,230,000. That difference may not sound like a lot of money to some people but for her it was lifechanging. She was going to a retirement village and the extra money meant she was able to afford to buy a new car. She was so happy. Another property at Muriwai was memorable because the family selling it got $700,000 above the reserve. They were absolutely delighted and that has completely changed their lives.
ON THE STANDOUT AUCTION OF THEIR CAREER
MURRAY SMITH: It’s not always about high prices, it can be selling for someone who is not in a good position financially and what you can get that makes all the difference. I remember doing an old rundown house in Te Atatu Peninsula years ago where the reserve was $115,000 and we sold it for $147,000. That was a lot in those days and it was amazing for the vendor.
And at an auction I did 25 years ago in Blockhouse Bay, I heard the buyer saying in Mandarin how much he wanted to pay - $188,000 – and understood because I’d learned a few words of Mandarin. It helped to ease a situation where their English wasn’t too flash and to break the ice. It gives you a bit of a connection when you can understand their language.
Murray Smith unwinding with his guitar earlier this year. Photo / Fiona Goodall
AARON DAVIS: One I’ll never forget is a property I sold a few years ago for a single mum. She’d bought land with a very ropey house on it at the top of the northwestern motorway for $300,000 which was all she could afford. She was just scraping together a living – she had teeth missing because she couldn’t afford to go to the dentist. She spent her money on her kids. The place was just about derelict but then the council rezoned the land and developers were buying it up. We sold it for $2,800,000, and she was so traumatized with joy, she couldn’t understand what it had got. She said, “$800,000?” and I said, “No, $2,800,000.” It was like she had won Lotto. It was like getting $2.5m of tax-free money and it completely changed her life.
JOHN BOWRING: One of the most amazing auctions of my career was selling the Mercedes Benz building at Mt Wellington – the big building you can see from the freeway. It went for $9,750,000 seven or eight years ago which was a huge price.
But probably the standout auction of my whole career was my first one. I was an agent at Bayleys at the time, and I wanted to be an auctioneer but I couldn’t get a job with them. One of Bayley’s top agents, Marnie Adams, knew Megan Jaffe [the owner of Ray White Remuera] and she said to Megan, “You should get this Australian guy John, he’s called about 1000 auctions.” I hadn’t, but Marnie said to me, “Just fake it ‘til you make it.”
So Megan gave me a chance and I called an auction in Remuera and we sold it, thank goodness. Megan said to me afterwards, “How many auctions have you really called?”
I told her it was my first one and she said, “I thought so. You’ve got a long way to go.” I guess I have come a long way since then.
