‘Another million buys you a house that’s ten times better’

In a sign of how heated the Auckland market is right now, sales at auctions in just two central city offices at the end of the last week topped $34 million.

At Ray White Ponsonby seven properties sold under the hammer for $15 million, while in Mount Eden, 11 properties sold for $19 million.

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Ray White Mount Eden business owner Jared Cooksley said it was the office’s “top week ever”, with chief auctioneer for the Ray White Group John Bowring estimating a crowd of 100 to 150 people at the auction.

Bowring said vendors were using the crowds in the auction rooms and the initial bidding action to adjust their reserves.

“They’ll adjust their reserve if they see a lot of active bidding. If they see five or six bidders, they’ll go ‘the market has spoken’.”

He said vendors were more hesitant if there are only one or two bidders, wondering why they don’t have more, but even in a strong market not every house was going to attract the buyers.

“If it’s appraised at $2 million to $2.1 million and then they set the reserve at $2.3 million then you get them to budge. It comes down to the house.”

Cooksley said that on top of one of a record auction week, the office also launched another ten listings – triple the usual number of three or so listings per week.

“This is a record for us. It’s quite sad, actually. There are really lovely buyers who are missing out and we wish there were more people selling their houses.”

Cooksley said that the high prices were a result of low interest rates, with the gap particularly noticeable for properties above $1.5 million.

“They can spend an extra $1 million and it’s not going to cost them much more on their mortgage. How can you not do that? In that sub-$2 million market, another million buys you a house that’s ten times better.”

He said that two -bedroom cross lease units were a good litmus test of the market: a year ago they’d be achieving less than $600,000 in his area, but now were going for well over $700,000.

“People who have maybe held an investment for ten to 15 years are now just cashing out, and that’s the strongest first home market. That’s when you wish you had more stock. These buyers are up-grading from maybe a small city apartment. Everything is getting two to three bidders, across the board.”

Ray White agent Robyn Ellson, who marketed four properties that sold at the auction for $8.42 million, said that in her 10 years in the business she had never seen as many buyers in the market.

Crowds at the Ray White Mt Eden auctions last week. Photo / Supplied

Her top seller was a house at 12 Milton Road, Mount Eden, which achieved $2.59 million, well above its July 2017 rateable valuation of $1.85 million.

“It feels like everyone is buying a house. It really is amazing the number of buyers and it’s not all the same people either.

“Everyone is very determined to own. People have got back in the market, there is definite FOMO.

"It's just gutting for the under-bidders. I get upset for them myself.”

Ellson said that buyers were in every bracket “as much as the bank will give them”, starting from $1.5 million, where she is seeing a lot of mums and dads buying good accommodation for their kids. She said that even yields of only two to seven percent “stack up remarkably well compared to money in the bank”.

She added that days in market were shrinking. “It’s just not possible to run a three-week campaign. Someone puts in an exceptional pre-auction offer and it just lights a fire"

Ellson and Cooksley are not predicting how long into December the market will stay this busy, saying listings and auction booking in the next week or two will be a good indication.

Ray White chief operating officer Daniel Coulson, who sold the seven properties under the hammer for over $15 million at Ponsonby, said: “The market remains red-hot and it’s hard to predict pricing because of the strong competition for properties that we’re seeing across all price points.

“Owners would be forgiven for thinking they don’t need to market their home in the current environment. But what these results show is that a targeted marketing approach, coupled with the transparency of auction, is producing very strong prices.”