Auctions are again dominating the Auckland market

Earlier this year there were signs that auctions had lost their lustre but examining the past seven days of new listings coming on to the market in Auckland reveals close to half of all new listings are being marketed as auctions!

Here are the facts – between September 22 and 29, 808 properties were listed across the Auckland region from data on Realestate.co.nz. Of this total, 400 are being marketed as an auction. Over the month of September a total 1113 properties on the market were marketed as auctions, which represented 43% of the total properties listed in the month. Of course properties listed in the first week of September with a three-week campaign will now most likely be sold, thereby explaining the difference between the circa 50% in the past seven days and 43% for the past month.

Clearly auctions are the hot topics and the most favoured method of sale.

But, as ever, the question should be asked as to the success of auctions. However, when it comes to the success of auctions, this is where interpretation of figures becomes something of an art form!

Last week there were a couple of media articles that showcased auction performance.

The NZ Herald on Saturday examined the Barfoot & Thompson auction in the city office and stated that a reporter sat through 27 auctions, of which 11 sold under the hammer, with 10 passing in below reserve and six receiving no bids – a 41% success rate. The article went on to quote Peter Thompson reporting a 55% success rate – this number being the total of 11 sales plus a further 9 properties which had sold before auction. Now you can see why reporting on auction success is an art form!

The article quoted Harcourts saying that at a Christchurch auction in the week there were 23 sold from 25 presented at the Harcourts Grenadier offices in the city. Across the city another Harcourts office (Gold) reported selling 10 from 15 under the hammer.

Now, none of these figures will surprise as circumstances at every auction event will be very different and so will be the outcome. However in my mind the key matter in reporting auction success is simply this. Success is defined as how many properties of those offered at an auction event are sold under the hammer or at least within the next working day as is now the defined period under the Fair Trading Act. It is not relevant or appropriate to add to this list properties sold before the event (even if they were sold at an auction) nor properties that sold outside of this defined new time period.

I applaud Barfoot & Thompson which has embraced this new law change in its publicity of auction performance as it now simply details (i) sold under the hammer (ii) sold previously (iii) sold by 5pm next working day to arrive at total auctions. However they have ceased to detail total passed in as they used to do.

I have been keeping a record of these monthly reports from Barfoot & Thompson for the past 18 months and as you can see they provide a vital snapshot of the Auckland market (except for some months of no data).

At the peak of the property cycle back in first half of 2013 Barfoot &Thompson was reporting property sold under the hammer (plus on the day) consistently exceeded 40% of all monthly sales. Through the first half of 2014, this had fallen to less than a third in March and May, although April was incredibly active and successful. The past two months though have seen a falloff. It will be interesting to see the September results.

Looking outside Barfoot & Thompson and the Auckland market, the REINZ data of auction sales is the most reliable. I would have to qualify that statement though by saying that the data of auction sales has no clear definition. I would hesitate to guess that it simply relates to the sale of properties that were listed as being an auction irrespective of how the sale  was concluded. 

The data for the past three full years shows this interesting trend based on the first eight months in total for each of the past three years.

(Click to zoom)

Auckland auctions rose significantly between 2012 and 2013 (27% to 37%) before easing off this year. However, the focus of auctions has certainly spread outside Auckland where the proportion of sales represented by properties marketed as auctions has risen consistently to now represent 8.5% of the total sales outside Auckland (equivalent to 1 in 12) in the first eight months of this year.

It certainly appears that auctions are once again the most preferred method of sale for Auckland agents and a growing number outside Auckland.