This article has been updated to reflect the further development of the market through to March 2012.
The state of the property market can be assessed by keeping a close eye on the number of properties being marketed for Auction. When you spot more and more of the For Sale street signs emblazened with “Auction” you can safely bet that the property market is heating up.
This view is certainly articulated in the article today titled “Auckland house auctions hit high“. Based on sales data supplied by the Real Estate Institute (REINZ) the number of properties sold in November across the country as Auctions was the highest ever at more than 25%. Looking specifically at the Auckland market Barfoot & Thompson November reported that around 40% of it’s current listings are being for sale by auction.
These reported statistics got me interested as we have in the past reported on the number of listings coming onto the market and specifically on the market across our comprehensive database. Back in August we reported that Auctions across the whole country had risen to a peak in June as representing 13% of all new listings, in Auckland that figure was even higher with over 20% of all new listings being for Auction properties for sale. These figures though are lower than the respective REINZ or Barfoot & Thompson figures.
Looking at the latest data for the month of November we saw 1,206 new listings of Auctions of properties come onto the market across NZ, this represented 9% of all new listings. In Auckland the number was 790 which represented over 17% – a new record, so the data is consistent.
In tracking the data over the past 4 years what is very interesting is that Auctions as a form of marketing rises as available inventory falls (as it does when the market picks up) and similarly falls as inventory rises. This is represented in the chart below, tracking new listings of Auctions per month as a % of all listings (blue bars) against the available stock on the market as measured as equivalent weeks sales as we track for the NZ Property Report.
In Auckland the same trend is evident, and more pronounced.
So it is clear that Auction marketing is a bellwether of the state of the market, which is not that surprising as vendors are more keen to pitch their property to a more active market when there is more demand from active buyers and see the open auction environment ensure that transparency works for them to maximise property demand lead pricing.
Updated
The first 3 months of 2012 has seen further significant growth in property sales matched to further tightening in the property market as new listings have failed to keep pace with the growing demand – the latest NZ Property Report provides detailed analysis of this. A consequence of this is that auctions have further increased as a chosen route to selling a home.
As cited above record levels of new listings coming onto the market as auctions were witnessed pre-Christmas, those record levels have been exceeded in the past few months. March reached a new high with 13% of all property listings across the country being auctions and in Auckland a record 24% of all new listings being auctions.
Auckland though is not alone, the chart below shows the comparison across the 19 regions of the country between March 2011 and March 2012 or auction listings as representative of all new listings. Almost all regions saw a massive increase in representation of auctions within the new listings with the Central North Island and Gisborne sharing the Auckland record representation with nearly a quarter of all new listings as auctions.
Point of Note
The realestate.co.nz website has a very useful feature which allows you search by pricing type (Auction / Negotiation / Tender / POA / Offers / Display Price). As at this time there are 1,875 properties being marketed on the website as Auctions, 406 properties being marketed on the website as Tenders, and 36,906 properties being marketed with a price on the website
Merry Christmas everyone and all the best for 2012.
There has been frantic buying activity over the last few days with, in the case of our office, two cash unconditional sales in the last 48 hours, one with multiple offers and the phone is still ringing hot with buyers wanting to view properties today and tomorrow and asking if we have anything new coming onto the market early in January.
This would have to be the busiest run through to Christmas that I can ever remember in my almost 30 year real estate career! It’s been just like 2007 over the last two months and with $3 billion worth of mortgage approvals granted over the last 3 weeks there are many approved buyers waiting for more homes to choose from.
The last time that level of mortgage approvals was granted in a 3 week period was in 2007.
Whether selling by auction, with an asking price or $By Negotiation you can be sure that with limited supply of homes and more buyers than we have seen for years, that prices will rise through summer and homes will sell quickly, especially in Auckland.