The introduction of new measures aimed at curbing investors in the Auckland market as well as moves by the Chinese government to restrict the amount of capital flowing out of China, appear to have taken the wind out of the sales of the Auckland housing market - and all indications are that it is now more of a buyers' market than a sellers' market.
There are reports of some auction clearance rates being lower than 35% as well as fewer attendees at auctions and sales volumes are down by around 20% for October on what they were in September. There are also more properties listed on the market for sale right now than there were over the winter months which is normal for this time of the year
When there is high competition at auction for a property the price can be pushed over expected market value if multiple bidders seek to secure a property and this has been common over the past year in the Auckland market. However what we are seeing now is a much higher number of properties passing in at auction and more properties being sold by negotiation afterwards or with an asking price, all of which are easier ways of purchasing for buyers.
Once a property has failed to sell at auction the vendor is more likely to be negotiable on their asking price and may sell for lower than the reserve they set at the auction. They may also consider accepting a conditional contract to allow the buyer more time to do due diligence.
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Buying at auction can be an anxious time for many and a daunting experience to first home buyers. Having a little extra time post auction means the first home buyer can stand back and objectively consider if the property is really want they want. Potentially this can also mean the deposit can be negotiated and allows more time for sorting finance. If they had concerns pre auction regarding weather tightness and building compliance they may then have that little bit more time to complete further building inspections or to get a full market valuation.
Apartments however still appear to be selling well at auction so expect strong competition in that market still - this is likely to be because they offer a more affordable entry for many into a market, which the latest QV House Price Index stats now show has an average value of over $900,000, than stand-alone homes.
The latest QV stats also show the Auckland Region has had the fastest annual rate of growth over the past year since the early 1990s - including values rising 24.1% for Auckland City; 27.7% for Waitakere City; 27.5% for Manukau City; 22.8% for North Shore City and 33.9% for the Papakura District.
Such a huge rate of growth is not sustainable and now that sales activity is slowing it's likely the rate of value growth will also slow over the next three months and we may even start to see values begin to plateau in parts of the city by Christmas.