Auckland's red-hot property market may finally have plateaued. Auction clearance rates have dropped and attendance rates are down as soaring prices flatten out, according to industry insiders.
Experts attribute the turn to investors pulling out of the market because of new Reserve Bank rules requiring 30 per cent deposits for Auckland landlords and a looming tax on quick-flick investment properties, due to come into effect next week.
Kiri Barfoot, a director of Auckland's biggest agency, Barfoot & Thompson, confirmed auction clearance rates were down a few percentage points lately.
Auckland landlord Ron Hoy Fong, of coaching business Ronovationz, said he had noticed a sharp downturn in both auction attendance and sales in the last fortnight.
"More properties are being passed in," Fong said.
"There are noticeably less and less people at the auctions. Over half the properties were passed in last week," he said of Barfoot's auction last Wednesday at its Shortland St headquarters.
Mortgage broker Bruce Patten said he had also noticed auction clearance rates falling from unprecedented highs of about 95 per cent.
"There has been a frenzy of activity in the investment space before the banks changed their policies," Patten said.
Investors accounted for about 40 per cent of the market but he predicted that figure would now fall, potentially removing competition for first-home buyers.
Landlords had fled Auckland for other areas, he said.
"We've never done as many loans in Tauranga out of Auckland in my 14 years in banking."
Interest.co.nz reported yesterday Auckland's residential property market "could be at a critical turning point".
"Investors are becoming increasingly cautious and some are picking that the market has already peaked and are choosing to cash up and take their capital gains now. If they are right, Auckland investors could be facing a market without the prospect of further capital gains for some time."
Jeff Royle, chief executive of mortgage broker iLender, said landlords lost their appetite for Auckland from about July when most banks implemented the 30 per cent deposit restrictions.
"There's been a shift in emphasis for investors to outside Auckland: Hamilton, Tauranga, Warkworth, Helensville. There's a bit of spookiness going on. You can't sustain 20 per cent price rises, which Auckland has done over the last year in most suburbs. It's quite dangerous. I'm pleased to see auction clearance rates fall."
Barfoot's August sales figures showed a dip in average residential sales prices to $821,079 - the first fall in half a year. Real Estate Institute figures showed median sale prices near flat from the previous month on $740,000.
Barfoot said last Tuesday's city south auction resulted in a 58 per cent clearance rate "on the day" while last Wednesday's city eastern auction saw 57 per cent sold under the hammer, compared with a Barfoot average across Auckland of about 60 per cent.
Last year, the firm's auction clearance rates were as high as 80 to 90 per cent on a good day, she said.
"I wouldn't like to see a headline saying 'auction clearance rates down 40 per cent' because it's more that there's been a minor adjustment."
Strong migration figures out this week, historically low interest rates and continuing steep demand for a shortfall of available homes meant newly listed Auckland properties remained extremely popular, she said.
She also pointed towards warmer weather and Christmas when prices and volumes usually rose.
Fong, who attends several auctions each week, said it wasn't just Barfoot's that was affected by a slump in activity. He cited a Royal Oak auction last week "where the room is normally packed but there were fewer people there". He had seen much the same in another Newmarket auction room two weeks ago.
• New rules to take effect from next Thursday:
• Residential property investors in Auckland using bank loans must have deposits of at least 30%.
• The existing "speed limit" for high LVR borrowing outside Auckland increases from 10% to 15% to reflect the more subdued provincial housing market conditions.
• Existing 10% speed limit for loans to owner-occupiers in Auckland at LVRs of greater than 80 per cent retained.
• All buyers must have a New Zealand bank account and IRD number which will help track the number of overseas purchasers.
• Quick-flick tax being introduced to tax capital gain on any investment property bought and sold within two years.