Up and down auction results demonstrate the volatile nature of the real estate market at the moment, says Cameron Brain, Ray White’s auction manager for City Realty Group in Auckland.
The week ending April 1 saw a strong 72.1% clearance rate for the city group – but last week’s clearance rate was only 25%.
“I would say it’s quite volatile in the sense we’ve got good weeks, we’ve got bad weeks, but it is starting to level out,” says Brain.
The week ending April 1 saw a total sales value from auctions across the group’s five areas – City Apartments, Wynard Quarter, Parnell, Eden Terrace and Sandringham – of $11.845m, with an average of 2.09 bidders and 3.3 bids.
While that was a great result, last week was “a bit of an indifferent week”, Brain said.
“Our clearance rate was quite low, it ended up being 25 per cent. We had 12 auctions, we sold three, but my message to the team was we went into contract on probably another six of those and the pleasing thing to me was there was still a lot of engagement from buyers.
“In total we’ve had 23 auctions [for the fortnight], we’ve sold 11 of them under the hammer.”
That made the clearance rate under the hammer 47%, which Brain says is probably 20% higher than most other real estate groups currently.
He’s encouraged by the number of potential buyers registering to bid at auctions, which he says is increasing every week.
“It just fluctuates but it is getting better. We’re having much stronger buyer engagement – we’re having buyers registering to bid.”
He thinks the fluctuation is down in part to uncertainty from buyers as to what they should, and shouldn’t, do in the current market.
Brain hosting online auctions during the most recent Auckland lockdown. Photo / Supplied
“Meeting buyers at auctions and meeting buyers at open homes, which I like to do at the weekend, there’s still a bit of confusion out there from them.”
People are not sure whether to act now or hold off a bit longer, Brain says.
“You have some people saying the market’s crashed; you have some people saying the market’s hot.
“But as someone said to me years ago nobody rings the bell when the market hits the bottom and no one rings the bell when the market is obviously at its top.
“The one point I make to everybody is ‘if you are ready to buy, buy.'”
The clearance rate for city apartments is also lower than usual, Brain says.
For 51 auctions over January to March, the clearance rate was 54.9%, whereas Brain says over the last couple of years the clearance rate has sat around the high 70s/early 80s.
Apartments that didn’t sell at auction have been priced, however, and are getting good engagement from buyers, Brain says.
“We’re seeing investors slowly coming back into the marketplace, (we) haven’t seen them for quite some time.”
Brain points to a property in Wynyard Quarter as demonstrating the volatility in the market.
A townhouse on Pakenham Street, in Auckland’s Wynyard Quarter, sold under the hammer last month. Photo / Supplied
The two-bedroom townhouse in Pakenham Street went to auction in December but did not get a single bid.
The property was priced at $1.695m the day after passing in, and in early February the price was reduced to $1.675m, but there were still no takers.
But when it was re-auctioned last month there was strong bidding and the property sold for $1.725m. “That sums up what I believe is happening in the marketplace at the moment,” Brain said.
The property was priced at $1.695m the day after it failed to sell at auction, and in early February that price was reduced to $1.675m but there were still no takers.
Ray White agent Chris Lewis, who marketed the property, said: “We got $50,000 more than when we had it priced.”
Because the banks were being so thorough about lending, the two main bidders only got their finance approved the afternoon before the second auction, so it was down to the wire, he said.
“It’s a good property and a great location so it deserved some attention but it’s still a very fickle market, almost case by case.”
That’s the situation across Auckland, he said. “There’s no one blanket rule or price reduction or increase for all of Auckland. It’s very changeable suburb by suburb.”
But the sale showed it was not all doom and gloom out there, Lewis said: “There are little pockets of sunshine where everyone’s smiling.”