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The Impact of Auctions on Residential Sales Prices in New Zealand

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Abstract

The use of an auction to sell residential real estate in the United States is often associated with distressed sales such as foreclosure, bankruptcy or estate settlement. In other areas of the world, auctions are more commonly used and viewed as a viable, preferred method of selling a house. This article uses hedonic pricing methodology to compare the sale prices of houses in Christchurch, New Zealand sold at auction with those sold by private treaty. The results indicate that in some cases auctions can result in premium sale prices. In none of the cases studied did auctions result in lower prices than private-treaty sales.

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  • Mark G. Dotzour & Everard Moorhead & Daniel T. Winkler, 1998. "The Impact of Auctions on Residential Sales Prices in New Zealand," Journal of Real Estate Research, American Real Estate Society, vol. 16(1), pages 57-72.
    • Handle: RePEc:jre:issued:v:16:n:1:1998:p:57-72
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    1. Stevenson, Simon & Young, James & Gurdgiev, Constantin, 2010. "A comparison of the appraisal process for auction and private treaty residential sales," Journal of Housing Economics, Elsevier, vol. 19(2), pages 145-154, June.
    2. John D. Benjamin & G. Donald Jud & G. Stacy Sirmans, 2000. "Real Estate Brokerage and the Hosting Market: An Annotated Bibliography," Journal of Real Estate Research, American Real Estate Society, vol. 20(1), pages 217-278.
    3. Yuen Leng Chow & Isa E. Hafalir & Abdullah Yavas, 2015. "Auction versus Negotiated Sale: Evidence from Real Estate Sales," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 432-470, June.
    4. Benjamin Balzer & Antonio Rosato, 2018. "Expectations-Based Loss Aversion in Common-Value Auctions: Extensive vs. Intensive Risk," Working Paper Series 50, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    5. Olena Myrna, 2022. "Lower price increases, the bounded rationality of bidders, and underbidding concerns in online agricultural land auctions: The Ukrainian case," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(3), pages 826-844, September.
    6. John D. Benjamin & G. Donald Jud & G. Stacy Sirmans, 2000. "What Do We Know About Real Estate Brokerage?," Journal of Real Estate Research, American Real Estate Society, vol. 20(1), pages 5-30.
    7. Alina Arefeva, 2016. "How Auctions Amplify House-Price Fluctuations," 2016 Meeting Papers 714, Society for Economic Dynamics.
    8. Simon Stevenson & James Young, 2015. "The Role of Undisclosed Reserves in English Open Outcry Auctions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 375-402, June.
    9. Michael LaCour-Little & Arsenio Staer, 2016. "Earthquakes and Price Discovery in the Housing Market: Evidence from New Zealand," International Real Estate Review, Global Social Science Institute, vol. 19(4), pages 493-513.
    10. Carl R. Gwin & Seow-Eng Ong & Andrew C. Spieler, 2005. "Auctions and Land Values: An Experimental Analysis," Urban Studies, Urban Studies Journal Limited, vol. 42(12), pages 2245-2259, November.
    11. Zan Yang & Rongrong Ren & Hongyu Liu & Huan Zhang, 2015. "Land leasing and local government behaviour in China: Evidence from Beijing," Urban Studies, Urban Studies Journal Limited, vol. 52(5), pages 841-856, April.
    12. Du, Hongyan & Ma, Yongkai & An, Yunbi, 2011. "The impact of land policy on the relation between housing and land prices: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(1), pages 19-27, February.
    13. Weldesilassie, Alebel B. & B.Worku, Genanew, 2022. "Managing urban land markets in Africa: Valuation, performance and policy implication," Land Use Policy, Elsevier, vol. 114(C).
    14. Yuen Leng Chow & Joseph T.L. Ooi, 2014. "First-Price Sealed-Bid Tender versus English Open Auction: Evidence from Land Auctions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(2), pages 253-278, June.
    15. Amoruso Paola & Mariani Massimo & d’Amato Maurizio & Didonato Raffaele, 2020. "Italian Auction Market: Features of Discounted Forced Sale Price," Real Estate Management and Valuation, Sciendo, vol. 28(3), pages 12-23, September.
    16. Simon Stevenson & James Young, 2015. "The probability of sale and price premiums in withdrawn auctioned properties," Urban Studies, Urban Studies Journal Limited, vol. 52(2), pages 279-297, February.
    17. Jianfu Shen & Frederik Pretorius & K. W. Chau, 2018. "Land Auctions with Budget Constraints," The Journal of Real Estate Finance and Economics, Springer, vol. 56(3), pages 443-471, April.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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