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Price transparency as demand eases

Miriam Bell finds out why we are seeing a lot more prices on house listings.

Auctions have fallen out of favour as the housing market cools, and that has led to a resurgence in prices on sales adverts, agents say.

There were 721 properties sold at auction nationwide last month, the latest Real Estate Institute figures show.

That amounts to just 14.8% of all sales, and is a significant drop on the same time last year when close to a third (29.8%) of all properties were sold at auction.

Real Estate Institute chief executive Jen Baird says that in a slower market, there tends to be a trend away from auctions.

New Trade Me analysis of listings by sale method supports this. It shows 57% of listings nationwide included the sellers’ price expectations in April. That was up from 46% at the same time last year.

The move away from auctions and tenders to more price-transparent methods, such as ‘‘inquiries over’’ or ‘‘asking price’’, was evident across the three main centres.

In Auckland, 50% of April’s listings were ‘‘price by negotiation’’ and 38% were ‘‘asking price’’, while just 6% were for auctions. Last April 21% of listings were for auction.

Auctions have never been popular in Wellington, but they featured in just 1% of listings in April, down from 5% last year. Traditionally, sales by tender are preferred, but they made up 3% of listings, down from 13%.

The region’s listings with asking price and for ‘‘inquiries over’’ were up to 18% and 51% from 8% and 35% respectively.

‘‘In a slower market, there tends to be a trend away from auctions.’’

Jen Baird,

left Real Estate Institute chief executive

‘‘In a cooler market auctions are best for properties that are special, or different in some way.’’

Peter Thompson,

left But Barfoot & Thompson director

In Canterbury, listings for auction were down to 8% from 17% last year, while listings for asking price and ‘‘inquiries over’’ were up to 32% and 25% from 25% and 19%.

Realestate.co.nz figures also show a nationwide decrease in the number of properties listed for auction, and an increase in those listed with display prices.

Trade Me Property sales director Gavin Lloyd says the change in the market is reflected in the different ways Kiwis are choosing to sell their homes. ‘‘In the current climate, with supply high and demand easing it’s not surprising that sellers are having to be more transparent about their price expectations.’’

But Barfoot & Thompson director Peter Thompson says while the company is marketing more properties with prices, the best way of getting a sale over the line is still via auction, as they attract more buyers.

‘‘Even if the auction clearance rate has fallen, we are seeing a lot of success in the three to five days post auction. And if a property doesn’t sell under the hammer, it opens the sale up for conditional buyers.’’

Whether sale methods have changed depends on the property type, too, he says. ‘‘In a cooler market auctions are best for properties that are special, or different in some way.’’

Christchurch-based agent Vanessa Golightly, from Ray White Morris and Co, says that in a hot market everyone is a fan of auctions, and that changes as soon as the market slows down.

The pullback is driven by a

fear of not getting a result, but the regional clearance rate is about 50% – so there is still a 50% chance of selling unconditionally, she says.

‘‘If you don’t sell at auction, it’s not the end of the world. It helps establish a market price at that time. It’s all part of the process, and you can just move on to the next stage of the campaign.’’

There has been a noticeable shift to pricing methods, but it can be hard to price a property accurately and overcooking the price can impact on the campaign and its results, Golightly says.

‘‘A seller may expect a $1.2m sale, but the market may only be selling at $900,000 for comparable properties. An agent has to make that clear, because if they go to market at the sellers’ price, and it doesn’t sell, that’s on the agent.’’

Ray White Tawa to Pukerua Bay owner Graham Barr says the fact that prices are appearing in more sales campaigns is not necessarily a good thing, although buyers like it.

The problem is sellers want to see their property marketed at the premium price, and the prices being published are yesterday’s prices and do not reflect the current market, he says.

‘‘Pricing is complex because the market is easing, but sellers are still adjusting. Many think they should get the same price as their neighbour got for theirs last year, but sticking to that can put off potential buyers.’’

Another shift in the market is a big increase in the amount of conditional sales and negotiations that are taking place, Barr says.

Using non-pricing methods in a changing market leaves sellers vulnerable and buyers playing a guessing game, Property Brokers Palmerston North branch manager David Klue says.

Last year there were so many buyers that it was not possible to price a property properly, he says. ‘‘Buyer competition was setting the ultimate sale price, so you could price a property at $800,000, and it would sell for $900,000.’’

This year there has been a big increase in listings and the situation is very different. Agents should look at what comparable properties in the area are currently selling for to establish a price, he says.

‘‘That type of analysis provides security for sellers as it shows where the market is sitting, and it gives buyers confidence they are getting a fair price. Pricing offers greater certainty and clarity.’’

Auctions require unconditional sales, and 80% of sales at the moment are subject to conditions, so pricing works better for those buyers, Klue says. ‘‘But we are heading into a more balanced market, which should bring more buyers on to the market, and that will give support to non-pricing sales methods.’’

‘‘In the current climate, with supply high and demand easing it’s not surprising that sellers are having to be more transparent about their price expectations.’’

Gavin Lloyd,

left Trade Me Property sales director

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2022-05-28T07:00:00.0000000Z

2022-05-28T07:00:00.0000000Z

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