House auctions on the rise as optimum deals sought

The number of homes going to auction have spiked in Palmerston North as buyers and sellers hunt for the best possible deal in the city’s competitive property market.

Real Estate Institute of New Zealand figures reveal auctions made up 13 per cent of all house sales in the city in October, four times larger than the average.

For the previous five years, auction sales have made up 3.2 per cent of the city’s October sales.

REINZ Manawatu spokesman Andy Stewart said people were becoming more comfortable and familiar with the auction process.

‘‘There’s more and more people willing to look at auctions.

‘‘Even first home buyers with their Kiwisaver grants. Some even turn up at auctions with their mortgage managers so they can sort it out on the spot.’’

The auction sales are even higher if Ashhurst is removed from the REINZ figures, with the number rising to 17 per cent of total house sales.

Bayleys Palmerston North auctioneer John van Lienen said he hadn’t seen higher participation in auctions in his 30 years on the job.

‘‘We sell 98 per cent of them at or before auction, those are statistics I haven’t seen in years.’’

Fellow Bayleys auctioneer Jamie Madigan said auctions were likely to stay as, or more, popular right through to 2017.

‘‘While interest rates are so low, and supply so limited, there’s going to be more enquires [about auctions].’’

The were 547 new Manawatuwhanganui houses listed on realestate.co.nz in October – 2.8 per cent less than October last year.

If no more houses come on to the market, projections show the available properties in the region would be sold in 13 weeks. Historically, it would take an average of 37 weeks for the market to run dry.

Madigan said rising demand, and low supply, made it hard to figure out what an appropriate market price was.

Auctions let sellers find the best price available at that time, and offered buyers transparency about the process and what other people were bidding, he said.

Manawatu Property Investors Association president Pauline Beissel said auctions were more streamlined from a buyer’s perspective.

‘‘If you have the cash ready to go, it’s quick and easy.’’

The sale is largely finalised on the same day, which means it goes unconditional immediately.

But while there were advantages for buyers, she thought real estate agencies encouraged auctions because they were even better for sellers.

‘‘They know the price can be escalated or inflated by the competition, and it’s more of a finite timeline. They know it will sell on that day.’’

Beissel said another advantage for sellers was that if they accepted a conditional offer before the auction, they could go ahead with it and try for more.