Auckland auction clearance rates are down, Barfoot says

The path for desperate first-home Auckland buyers may be easing, as investor activity cools, particularly for places under $600,000.

Three multimillionaire landlords this week said Auckland auction clearance rates for lower-priced places were well down because investors no longer qualified for the big loans needed to buy.

And auction clearance rates on the day as low as 16 per cent has been revealed, compared to the more active phase of this boom when rates could be as high as 80 per cent or more.

Campbell Dunoon, Barfoot & Thompson auction manager, confirmed the drop but said that would not necessarily continue.

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"There has been a drop in our clearance rates from a couple of months ago noticeably in the sub $600,000 mark which is probably a result of the LVR," Dunoon said.

"Investors are more cautious and this has been reflected in some of our results. There has also been a slight increase in stock from this segment. There is a cautiousness from buyers and an increase in stock levels leading towards the end of the year.

"It has been suggested by others that first home buyers may see an opportunity here if the trend continues. Nevertheless, we are heading into Christmas fast and it will be interesting to see what happens when the market picks up in pace next February," he said.

Ron Hoy Fong, Gary Lim and David Whitburn, all property investors, said Auckland auction attendance and sales rates were well down and Hoy Fong said that might allow more owner-occupiers into the market.

All three said the lower-priced category was affected. Hoy Fong said stand-alone residential housing stock, attracting owner-occupiers, was unaffected but he cited a two-bedroom Sandringham brick and tile unit which sold for just over $600,000, about $100,000 beneath the Quotable Value E-valuer.

Dunoon said last week's Manukau auctions saw 48 properties called: eight were sold under the hammer but another four were sold straight afterwards making a total of 12 by 5pm the next day, he said.

Campbell Dunoon of Barfoot & Thompson.
Campbell Dunoon of Barfoot & Thompson.

That gave a 16 per cent clearance rate on the day but a 25 per cent clearance rate subsequently, his numbers showed.

"Our large Wednesday session in Shortland St last week - we had a total of 81 auctions: 31 sold under the hammer with a further nine by the next day making a total of 40," he said.

"Thursday on the North Shore 40 auctions were called, 14 under the hammer and another three by the next day," he said, so 17 places sold.

"Our Friday session last week we had a total of 21 auctions called with 12 under the hammer."

The Reserve Bank's loan-to-value ratios and requirements that foreign investors have an IRD number and a New Zealand bank account are said to be having a big impact on local and overseas buyer's ability to purchase properties.

Whitburn said he had particularly noticed far more restrictive bank lending practices in the last few months.

This meant that highly-leveraged investors could not get the same access to money like they previously were able to.​