No boom, just solid growth: Rise in property auctions gives hope to sector

Tuesday, 19 November 2024

Auction activity and clearance rates are on the rise at Ray White, the agency says.

There was a big jump in the number of houses being sold by auction last month - a sign of momentum returning to the market, say experts.

In October there were 1191 auction sales nationwide, 17.8% of all sales the latest Real Estate Institute figures show.

That was up from 899, 16.1% of sales, at the same time last year when the market was going through a mini recovery from the trough it fell to in the downturn.

But there were also 454 more auction sales in October than the previous month. In September there were 737 auctions nationally, making up 12.7% of all sales, according to the institute.

In Auckland 30% of homes sold at auction last month, up from 20.6% in September, while in Canterbury auctions made up 24.6% of sales, up from 16% the previous month.

There were 454 more auction sales nationwide in October than there were in September.

Ray White releases its auction statistics weekly, and the agency’s recent figures also reveal an ongoing rise in auction sales.

Its latest figures showed the agency had 221 auctions scheduled last week, and a clearance rate of 59.4%, up 7.8% on the same time last year. It followed a 54.7% clearance rate across the previous week’s 198 scheduled auctions.

Ray White head auctioneer Sam Steele said public confidence and a growing sense of activity had been key fixtures in its auctions across the country over the past week.

“The number of scheduled auctions forthcoming into the pre-Christmas market is enjoying its annual spike and already exceeded last year by a lift of close to 20%.”

An average of 2.4 registered bidders per auction last week displayed the keenness of buyers to participate, he said.

“However, auctions that secured four or more registered bidders enjoyed success rates over 83%.

This Ponsonby villa, vacant for 10 years, underwent a massive clean-up, revealing original timber floors and heritage charm. The villa, which cannot be demolished, sold under the hammer for $2.66m.

“The diversity of auction as a successful method of sale was shown across all asset classes with price ranges from $102,000 to $5.53 million achieved.”

Last week Steele said auctions were benefiting from a rise in market activity, and there had been a noticeable boost in buyer engagement.

In economist Tony Alexander’s latest survey of real estate agents, more agents reported that for the fifth month in a row they were seeing increased numbers at auctions.

While the net percentage was 30%, the latest monthly gain was just 2%, suggesting an initial surge of extra people entering into the market was stabilising at healthy rates.

A net 52% of survey respondents also reported that they were seeing more people at open homes, a rise from 45% last month and the strongest result since August last year when the measure hit 65%.

“As with other measures this result and the outcomes for recent months tell us that conditions in the real estate sector are improving,” Alexander said.

“But there is no boom under way – just good growth. Maybe this time it will prove sustainable whereas last year the gains quickly reversed.”

ANZ economists said the institute’s October figures showed a lift in sales volumes and a fall in the number of days it took to sell a house, and it suggested underlying momentum in the market was shifting.

That was consistent with the signal from the lift in the auction clearance rate over recent months, they said.

“The lift in activity paves the way for a recovery in house prices over 2025, but we expect to see further weakness in the near term given the backlog of stock on the market.

“However, the risks are now tilting toward a slightly sharper recovery in house prices over 2025 than our current forecast.”