CNN Business in London —
The top real estate firm in Auckland failed to meet demand in the largest city of New Zealand last year by selling homes rapidly enough.
According to Grant Sykes, manager at real estate firm Barfoot & Thompson, homes were “flying out the door.” He told CNN Business that there were times when agents stood around the room in awe of the prices being reached.
In one instance, a home sold in an auction that lasted just eight minutes for 1 million New Zealand dollars ($610,000) more than the asking price. (The majority of residences are sold at auction in New Zealand.)
When sales in May 2021 attracted thousands of bids, prices rose steadily. According to Sykes, Barfoot & Thompson’s clearing rate at auction has significantly decreased since that time, lengthening sales cycles and driving down prices.
The Real Estate Institute of New Zealand reports that since October 2021, the time it takes to sell a house in New Zealand has increased by about 10 days on average. Over the previous year, sales have decreased by about 35%, and median home prices have decreased by 7.5%.
New Zealand is seeing the worst of a worldwide property market crisis with dire consequences for the global economy.
House prices are now declining from Canada to China as the pandemic boom that drove prices into the stratosphere runs out of steam. This is paving the way for the largest housing market slowdown since the global financial crisis.
The sudden change is being caused by rising interest rates. Rates have reached levels not seen in more than a decade as central banks fight inflation to the detriment of the cost of borrowing.
US mortgage rates reached 7% last month, above 3% for the first time since 2002, before a small decline in November as inflation moderated. Mortgage rates have more than doubled since last year in the European Union and the United Kingdom, driving away would-be purchasers.