Housing auction numbers fall to a three year low as winter listings pile up

Just 197 residential properties went under the hammer across New Zealand in the first week of August, the quietest week for auctions since August 2023 once the Christmas and New Year shutdown is set aside. Of those, 89 sold on auction day, a clearance rate of 45 percent.

The figures, compiled from agency results by interest.co.nz, show auction volumes fell 20 percent in a single week, down from 246 properties the week before. Against the late March peak, the number of homes being taken to auction has dropped by close to two thirds.

Some of that is simply winter. Auctions are an outdoor sport in a country where August brings frosts, closed roads and short days, and the auction calendar always thins out between June and September before filling again for spring. But this winter the fall is steeper than seasonal habit alone explains, and it is happening while the number of houses actually for sale sits at its highest level in more than a decade.

Realestate.co.nz counted 33,252 residential properties available at the end of July, the largest mid winter stockpile in 12 years and 9.3 percent more than at the same point last year. That is down about 11 percent from the March peak of 37,638, which is what you would expect as listings expire over winter, but it still leaves buyers with an unusually deep pool to pick from.

What is telling is where that stock has come from. New listings in July numbered 7,698, effectively unchanged on the same month last year at 0.5 percent lower. Sellers are not flooding the market. The pile is building because homes are sitting on it longer, which is a slow selling problem rather than a supply shock.

Asking prices have started to reflect that. The national average asking price on Realestate.co.nz was $828,345 in July, down from $898,677 in February. That is a fall of $70,322, or 7.8 percent, across five consecutive months. In June the same measure sat at $866,314, so the biggest single monthly step down in that run happened in the month just gone.

Realestate.co.nz general manager for customers Vanessa Williams put the onus on sellers. “The vendors getting the best results are the ones who have a well-marketed property that’s priced to the current market conditions, rather than holding out for 2021 prices,” she said in the company’s July report.

Auckland tells the same story in slower motion. Barfoot & Thompson, the largest agency in the country’s biggest market, sold 845 homes in July, down from 890 in June and well short of the 957 it sold in July last year. Its median selling price was $945,000, up $5,000 on June and down $5,000 on a year earlier, while the average selling price slipped to $1,102,469. The agency took 1,551 new listings and finished the month with 5,943 properties on its books.

“The Auckland housing market was in hibernation in July,” managing director Peter Thompson said in the firm’s monthly report. “Sales and prices remained consistent with where they were in May and June.”

Sitting behind all of this is a change in the direction of interest rates that the market is still absorbing. On 8 July the Reserve Bank lifted the official cash rate to 2.5 percent, its first increase in more than three years. Wholesale rates have moved up since, and the retail follow through has begun. NBS raised its fixed home loan rates last week, and BNZ, Rabobank, Heartland and AMP all lifted term deposit rates, while Kiwibank has yet to move in this cycle. The New Zealand government 10 year bond was yielding 4.73 percent on Friday, with the 90 day bank bill rate at 2.93 percent.

For anyone who fixed a mortgage during the cheap years, the arithmetic on the next refix is now going the wrong way. For anyone shopping, the prospect of paying more to borrow is a good reason to take another week to think about it, and with more than 33,000 homes listed there is little penalty for waiting.

That combination is unkind to the auction method in particular. An auction works when several buyers are afraid of missing out and bid against each other in a room. It works badly when buyers know they have thirty alternatives, expect to negotiate, and want a building report and a finance approval before they commit to an unconditional bid. In markets like this one, agents tend to steer vendors towards deadline sales, price by negotiation or a plain asking price, so part of the drop in auction numbers is a change of sales method rather than a collapse in selling.

The other complication is the calendar. A general election is due in November, and campaigns tend to make people postpone big financial decisions until they know what tax, housing and interest rate settings are likely to look like. Spring is normally when the housing market wakes up, with September and October the heaviest listing months of the year. This year spring arrives with a large amount of unsold stock already carried over, buyers who have learned that patience pays, and a borrowing cost that is rising rather than falling.

Vendors who need to sell before Christmas will be the ones who find out first whether the market has moved further than they think.

Are you trying to buy or sell right now, and how is it going? Tell us what you are seeing in your part of the country in the comments below.

This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂