Residential property auction sales rate steady at 41%, Auckland CBD apartment market remains subdued

By Greg Ninness

Auction activity continued to pick up around the country last week as the housing market entered its busiest time of year, while the sales rates remained relatively steady overall.

Interest.co.nz monitored 386 residential property auctions throughout Aotearoa last week (12-18 February), up from an average of just under 300 a week over the first two weeks of February.

However while the number of properties being auctioned increased last week, the sales rate was flat, with the national sales rate at auction barely changed at 41% compared to 40% in the first half of February.

Auckland properties were the least likely to sell under the hammer with a 31% sales rate, while Canterbury properties were the most likely to sell with a 73% sales rate.

Within the Auckland market, which dominates auction activity by a substantial margin, sales rates ranged from 25% for properties in Waitakere and Papakura to 55% in Franklin.

One sector of the market that has been particularly hard hit over the last two years is the Auckland CBD apartment market, which is particularly reliant on overseas students.

According to data from the Ministry of Business Innovation and Employment, the number of overseas students in New Zealand has halved over the last couple of years, declining from a peak of 86,000 in October 2019 to just 43,000 in January this year.

That has had a flow on effect in the Auckland CBD apartment market, especially for the smaller units favoured by students, with vacancy levels rising and a corresponding drop in rents and capital values.

The sector is dominated by investors and there was some good news at the CBD apartment auctions attended by interest.co.nz over the last few weeks, with most properties attracting bids, suggesting investors are still active in the market.

However in most cases the auctioneers struggled to close a deal under the hammer and the average auction sales rate over the last few weeks for this type of property has been 31%, suggesting investors are remaining cautious while some vendors may have unrealistic price expectations.

However there has not been a flood of this type of properties onto the market either, suggesting most owners are prepared to sit tight and ride out the storm, for the time being at least.

The recent announcement that the Government would be easing the way for 5000 international students to enter the country later this year does not seem to have affected market sentiment yet.

The table below shows the average sales rates in those regions with the highest levels of auction activity last week.

You can see the results for the individual properties offered at all of the auctions monitored by interest.co.nz on its Residential Auction Results page.

This story was originally published on Interest.co.nz and has been republished here with permission.