By Ella Stewart of RNZ
Auckland's housing market continues to soar despite the city spending more than 100 days in lockdown whilst bidders buy houses online.
Homes are being snapped up sight unseen by Kiwis desperate to return home, and there is huge demand for homes on big sections that can be developed into terraced housing.
Reserve Bank increased the official cash rate this week by 25 basis points to 0.75 per cent.
When the country first went into lockdown last year, it left real estate companies in a tricky situation. With no way of conducting live auctions at venues Barfoot and Thompson contacted Australian company named Auctions Live.
From then auctioneers started selling houses from their lounges at home using the online streaming service.
Now three months later bidders are still spending millions from their couch.
RNZ's First Up went behind the scenes of one of Barfoot and Thompson's online auctions, with 150 lots for sale.
First to go under the hammer was a 1031sqm section located in Mt Eden, which was a multiple rental property consisting of one three bedroom family home, one two bedroom unit, and five one bedroom units. The opening bid was $5 million.
After a few rounds of negotiation with the seller and interested bidders, the property sold for $6.52m.
Well-known auctioneer Marian Tolich said the implementation of online auctions last year made it even more successful this year when Auckland went into lockdown in mid-August.
"We can't see the buyers, but they can see me. They place their bids, they punch it on an app and it comes up on a screen that I have and then I accept or reject, and then that shows up on the TV screen running behind me. We're actually continuing to do that now from our various auction venues, although now we also are dealing with phone bidders. Agents can come into our premises, they have to be masked and aside."
Since lockdown, Barfoot and Thompson has seen about 7500 people register online to bid with up to 12 people registering for each property.
The next property up for auction was a four-bedroom house in the Auckland suburb of Lynfield, with views of the Manukau Harbour. The bidding started at $1.7m, and eventually sold for $2.01m to an online bidder.
"Sometimes it's crazy because as the bids come in, there is a verbal 'Auctions live bid!' announcement and sometimes the screen lights up in front of me and I have four bids placed at the same time, but the computer actually works out which one came in first in milliseconds," Tolich explained.
Since mid-August, there have been about 43,000 bids online leading to 1500 successful sales worth over $2 billion.
Tolich said lockdown had caused some pent-up demand in the market, especially when Auckland moved to level 3 which meant open homes were possible, albeit with tight restrictions.
"For those first couple of weeks there were people that had already seen properties and they wanted to buy them. Then it got quiet for a week or two, but once buyers could start inspecting properties again, there was a crazy rush to buy.
"I have heard anecdotally there were people that had sold before lockdown and were desperate to buy because they had to be out of their houses. There were people that were pre-approved for finance that was expiring so they had to buy. And of course, now with the increase in interest rates, there's definitely people out there again."
Under the Government's proposed changes to the Resource Management Act, developers will be able to build up to three homes of up to three storeys on most sites without resource consent.
Tolich said this change had led to people bidding on properties without even viewing, with plans to develop terrace housing.
"In Auckland especially, there's a huge demand for sites 600sqm upwards with traditional Kiwi style homes on them, which they can under the Unitary Plan build five or six terrace houses. The people looking at those, the developers, are really not interested in the house.
"Homes that were usually perhaps preferred by first home buyers are now being snapped up at a hugely increased price by developers."
Tolich, who has more than 20 years of experience, said she had seen it all, but the continued increase in property prices was unprecedented.
"It used to be unprecedented that you'd pay $500,000 for a two-bedroom brick and tile unit in Epsom. Now people are paying $1.3m for a two-bedroom brick and tile in Epsom. It's only the price that's unprecedented in terms of value, but relative to someone paying $1.8m for an average home on 600sqm in Blockhouse Bay. That's huge as well. That used to be $950,000."
The average house price in Auckland is now more than $1m, with the average house price across the country at about $900,000.
Infometrics principal economist Brad Olsen said the problem was that wages were not keeping up with the growth in housing prices and whilst house prices had been predicted to fall between five and 10 per cent, that had not happened.
"With the wage subsidy and the strength of the economic bounce back in New Zealand, we saw instead house prices go up 30 per cent per annum. Coming into the second lockdown, because we'd had that experience from last year, we expected that the housing market might again continue to roar back to life, and that's exactly what it has done. Prices in October were up 2.9 per cent on a seasonally adjusted basis from the month before those intense pressures definitely coming forward.
"What we have seen with these lockdown restrictions across Auckland and other parts of New Zealand is that the number of houses that have been able to be sold has been lower than previously, very much because of those lockdowns, but also because we had a large surge in house sales at the last half of 2020."
Olsen said the increase in the official cash rate had already had an impact on interest rates at major banks moving upward.
"For people who are looking to get a mortgage at the moment, it is becoming more expensive to repay that mortgage, and we're also seeing that banks in general are starting to limit just how much lending they're putting out there, making sure that they are getting a 20 per cent deposit from everyone now heading forward because of the risks that low deposit incomes and low deposit mortgages have for New Zealand's financial stability."
Meanwhile back at Barfoot and Thompson, of the 150 lots up for auction online on Wednesday, 61 were sold, 75 were passed in, nine were withdrawn and six were postponed.
Auctioneer Marian Tolich said it was tough to buy a house.
"It's expensive, but my advice to people is buy as soon as you can.
"For all of us, our first home wasn't our dream home. I never got my dream home until my children all left home and I could move to something with three bedrooms and a pool, in the middle of Ponsonby. Everyone's first house is what you can afford.
"The sooner you get into the market, the cheaper that it will be in the long run."