The Unconditional Blog

Taking the property pulse of the market – March 2010

Posted on: March 19th, 2010 | Filed in Buying / Selling a home, REINZ Monthly data, TV3 Property Pulse

Yesterday was a chance to provide an update of the property market on the new regular slot on TV3 Business Breakfast. For those readers who were not up at 6.40am you can view the segment here on the TV3 website.

The summary covered the latest Real Estate Institute sales figures for January as well as latest data on website listings.

Sales

The sales in February totaled 5,029. Whilst up from the 3,666 properties sold in January, the seasonally adjusted sales were 4% down on February 2009 – itself down 18% from February 2008. The most recent 3 month period (Dec / Jan / Feb) totaled 13,652, this compared to 13,236 in the same period in 2008/9. At the peak of the market back in 2003/4 the total was more than double the current level at 26,910.

The chart below shows the period from 1993 to 2010 and tracks the sales for the same 3 month period each year of December, January and February.

Sales Price

The Stratified median sales price for February as reported by the Real Estate Institute in association with the Reserve Bank rallied slightly in February from a slide which began in November last year. The figure of $362,150 as the chart below shows is still 4.9% below the peak of the market some 27 months ago. The resurgence of houses prices seen through 2009 when the price came within 2% of the peak has certainly lost steam.

Listings

The most recent NZ Property Report for February highlighted the rise in the inventory of unsold houses. A total over 15,000 new listings for houses for sale came onto the market in February – a 47% increase on the number in January. This new stocking adding to the existing stock took the total inventory to over 48 weeks up from 40 weeks in January.

Taking the latest pulse of the market looking at the flow of new listings coming onto the market – the fact is that March is going to be another month of significant activity with in all likelihood that another 15,000 listings hitting the market. The key question which will not be answered until the 16th April will be the level of sales of properties in March as recorded by the Real Estate Institute.

The next NZ Property Report for the month of March will be published on Thursday the 1st April (no April fools jokes OK!). It will actually mark the first anniversary of this report. All of the prior months reports are archived on the Unconditional website under NZ Property Report.

If you are selling your home – please read this!

Posted on: March 17th, 2010 | Filed in Featured, Online marketing

An early lesson I recall when starting out to write this blog, was that if ever you feel that you need an inspiration for a blog post – just recall a recent conversation. The topic of the conversation is sure to be of benefit to share.

Well this post, although stimulated by a telephone conversation, was not originated through a dry spell of me searching for a topic – quite the opposite, there seems so much to write about real estate these days! However as you will see this issue is a pet issue for me. So here goes!

Why is it that so many properties featured on this website and in fact so many websites, showcase such poor photographs?!

This is a serious question, and it was asked of me by a professional photographer who was struggling to get his local real estate agents to take seriously his service. (as an aside I would like to point out this is not an advertorial for any particular photo service or photographer, this is simply something that I think is really important. In the spirit of openness and reciprocity the photo service he works for is Essential Images)

As we spoke and we discussed this issue, it struck me that whilst the real estate profession should be motivated to present the very best images for every property they market on the web, there is a sense that vendors should be far more demanding of this from agents. This seems so strange, after all where else do people begin searching for property these days? At the time of the last research nearly a year ago close to 80% of all buyers used online in the recent week to search for property; whilst traditional media such as newspapers and magazines languished at just 31% and 46% respectively. In the US the percentage is over 93% of all buyers using online search.

We all know the expression – a picture is worth a thousand words. Well in the same vein when it comes to advertising property online; 20 photos are probably worth a hundred time more than half a dozen photos; and a high quality photo set for a property is worth thousands!

Courtesy of the photographer I spoke to, here are some of his examples of the difference professional photos can make to a property presentation online.

The presentation of this lounge is considerably enhanced through the use of the right light balance to better show the relationship between indoors and outside.

Whilst the bathroom may not be the most appealing part of the house, good lighting makes all the difference; in this case bringing the room to life and show off the polished floor.

The all important exterior deck can be challenging to photograph right, without the expert eye. Whilst a bight cloudless day shows off the appeal of the deck; without the right skills the interior is left as a dark hole!

The web is a visual medium. The human eye can scan a page of images of property in a mere second or two. In that time your house (be that your house as the vendor, or as the appointed agent has to be seen and then clicked on to elicit interest and a further review.

At that stage the photos, and nowadays that selection of photos should be extensive (ie. more than 20) needs to captivate the interested buyer to engage them and hook them in, so they then go on to read the details and really consider the property for a physical inspection.

This all seems so logical. Why would you not get a professional photographer to undertake an extensive photo shoot? – yet so many properties on this website are poorly presented with barely a handful of images some of them taken with a camera phone.

If the answer is money – then think again. Most photographers charge much less than $500, many times less than $250. Yes; that has to be paid up front. But then if you are serious about selling you need to help sell the house, and in this cluttered and competitive market how else are you going to standout? – certainly not if you only have 5 average quality photos.

The median price of property across the country is $350,000; even in the cheapest region Southland the median price is $190,000. Why then would you not spend $250 to really help the sale of a $190,000 property – that amounts to just 0.13% of the sale price. Or think of it another way $250 is little more than a week’s mortgage payment. A well presented property is far more likely to sell faster and therefore save you more than a single week’s interest on the mortgage.

Property sales for February show a continued subdued market

Posted on: March 12th, 2010 | Filed in REINZ Monthly data

The sales figures released by the Real Estate Institute for Feb 2010 of 5,029 properties sold in the month will come as some surprise to property market watchers.

This figure was the lowest February sales reported since data began in 1992. It represents a 3.8% decline in sales as compared to February last year, which itself was down 18% on the 2008 figure. The figures for the month of February alone tracked over the past decade are shown below. They clearly highlight the decline that has been seen in this key month over this time and the fact that the market remains subdued.

February is traditionally one of the stronger months for sales – on average 8.9% of all annual sales occur in February. February is also the 3rd most active month for sales, after March and November.

Extrapolating this month’s sales figure into a full year would show 56,689 sales. To put this in context the lowest 12 month sales seen over the past 18 years was the period leading up to February 2009 when a total of 53,540 sales were recorded. The biggest 12 month period by contrast was the period ending April 2004 when 121,777 properties were sold.

Taking the seasonally adjusted sales figures over the past 5 years the chart below provides a sense of clarity as to what the state of the current property market.

The key question will be the impact of this slow rate of sales on the inventory of unsold houses. The NZ Property Report for February showed a level of 48 weeks of inventory based on the January sales figures and the addition to the market of over 15,000 new listings in February. It will be very interesting to see the March report which will be published on this site on the 1st April.

Twitter – carving out a valuable space in our day to day world

Posted on: March 11th, 2010 | Filed in Online marketing, Technology

One of the great benefits of a blog is the ability to go back in time to review old posts and see how issues have changed and then refer to them. So when it comes to Twitter I find myself writing a third post on this subject.

My first post was back in August 2008 and at that time I had set up a Twitter account but felt a bit like a sideline spectator trying to better understand the benefits outside of event commentaries.

Some 6 months later and I found myself with 3 months of active usage under my belt and a growing appreciation of the benefits of this communication technology.

So a further year on and I find that Twitter is now my “first place” for news as well as status updates on my world and the connections I want and need to make with the world around me. It is more important than news websites and RSS feeds and with the many applications drawing on the API it is conspicuously becoming a more frequent check than my email.

Simply put Twitter is a live feed into the world I am interested in which has a large component of real estate, and sourcing real estate news can be undertaken so easily by following the key people who like me use Twitter to highlight their latest blog post or direct people to interesting stories on the web.

Every time a major event or news story breaks I can now be assured that if I am at my laptop I will hear about it / see it on Twitter – no longer do I have to refresh the news sites. With mobile clients even when away from my laptop I know truly the world is at my finger tips.

For me Twitter is certainly not inane banter – it is a business tool to aid productivity and comprehension. It is also a marketing tool to ensure that my aspiring communications about this real estate industry are spread and read widely. I do that by cultivating a loyal following through valuable referrals to information and articles of interest – the very essence of reciprocity.

So 15 months into serious Twitter usage it is time to further tailor my approach to Twitter. We have launched a Realestate.co.nz Twitter account.

From now on the tweets on the Realestate.co.nz (@realestateconz) and my own account (@alistairnz) will be clearly separated. Realestate.co.nz Twitter account will focus on news and articles purely related to the industry of real estate. This will comprise articles on the industry for both agents and consumers alike, it will also draw attention to recent blog posts written by agents who blog both on their own and on the Voices platform on Unconditional. The account will also be able to provide a status update to the website – should anything need urgently communicating.

As for my own account, I will tend to use this to share observations and insights into things I think are important – real estate certainly, but also technology and business in general.

So please come join us and follow Realestate.co.nz on Twitter and/or follow me on Twitter.

Grocery shopping and real estate – a match made in heaven?

Posted on: March 11th, 2010 | Filed in Buying / Selling a home, Featured, International, Real Estate Industry

Grocery aisle - real estate and grocery - a match made in heaven? This week has seen the official launch of a new real estate service in the UK, bringing the British public a real estate service packaged up with their weekly groceries.

Tesco, the largest UK grocery chain has partnered with Spicerhaart, one of the UK’s largest real estate chains to establish iSold – what they describe as “The UK’s newest estate agency, iSold has taken the very best in estate agency and made it even better”.

The service offered by iSold appears from the website analysis to be a 3 tiered full service comprising an up front fee of £299 (NZ$636) for valuation and marketing including extensive online profile of the property across the main websites. A completion fee of £700 (NZ$1,500) is payable on sale. This basic package is complemented by a Premium package at a total cost of £1,119 (NZ$2,380) and Premium Plus at £1,299 (NZ$2,764) – no clear details of the extent of the premium services are yet available.

It is clear from the current site that a lot of focus is placed on the valuation and the right pricing to help you sell. The site states that iSold has their own locally-based valuation experts. The initial launch has been focused in Bristol before this week rolling out around a number of regional centers across the country.

This activity comes close on the heals of the move by RE/MAX real estate brokerage in New England (US) to open 17 micro real estate offices within a chain of grocery stores.

The question is – Is this likely to be a future trend for the real estate industry here in NZ as more and more real estate offices question their high street presence as more of the marketing moves online?

There is quiet a bit of precedent already established in this area of grocery chain diversification. It is worth reflecting on this to provide some perspective to this concept. Here in NZ we had an ambitious move by Foodstuffs in 2003 to establish a banking service (SuperBank) in their New World stores. That move which was itself modeled on the Tesco banking service in the UK ultimately failed to capture sufficient customers before the business folded in 2006 with all the customers being transferred to Kiwibank.

The fact is grocery stores are very high traffic outlets. They are very strong retail brands and they are always looking for higher margin offerings to supplement the high volume / low margin grocery business. So there is a possibility for such a move in the future. It is also interesting to compare this UK iSold model with “The Joneses” business model launched back in 2007 with a full service agency based on a fixed fee service instead of traditional commissions.

1,000,000 real estate listings!

Posted on: March 2nd, 2010 | Filed in Featured, Online marketing, Website searching

At 4.17am this morning we processed our one millionth listing onto the website of realestate.co.nz – a significant milestone!

The website began life in August 2006 when the former REINZ website of RealENZ was shut down and the new website burst onto the market. Since that time over 1 million listings have been featured on the website over the past 1,290 days – that equates to an average of 775 per day or around 32 new listings every hour of everyday.

Realestate.co.nz is the most comprehensive website for all categories of real estate listings in NZ as marketed by licensed real estate agents. The site covers the full spectrum from homes for sale and rent, commercial property for sale or lease, farms and agricultural land as well as businesses for sale.

More than half of the million listings have been made up of properties for sale. A total of 545,000 have been homes for sale – the biggest year was 2007 with 165,000 new listings comparing with the quietest year last year with just 125,000.

Commercial property for lease and for sale have comprised over 90,000 listings with a steady growth in each of the past 2 years – 2009 alone saw just over 30,000 new listings come onto the market.

A massive 77,ooo listings have been featured for building sections. This sector reached a peak in 2008 with 21,000 before falling back somewhat last year to 17,000.

Since day one realestate.co.nz has enjoyed the support of the vast majority of the real estate profession – a commitment that has grown stronger over the years to see now over 94% of all licensed offices using the site – far ahead of the nearest competitor Trade me property.

Taking the live data as of today – realestate.co.nz has for example 50,184 homes for sale. This compares to 42,499 on Trade me.

As most people appreciate one of the key differences between the two sites is that Trade me takes adverts from homeowners looking to sell privately. In a recent NBR article Trade me highlighted that 16% of their property listings were from private sellers – applying this calculation would mean that today 35,699 listings from licensed real estate agents are featured on Trade me Property as compares to 50,184 on realestate.co.nz. In other words a search on Trade me only shows 60% of the local market for real estate listings of homes marketed by licensed real estate agents.

Note: The NBR article states that Trade me features 100,000 properties – this is the number of total listings covering all categories that are displayed on the website.

The category of homes for sale excludes lifestyle property and sections for sale but does include apartments and townhouses as well as units and home and income properties.

Is summer really the best time to sell a property?

Posted on: March 1st, 2010 | Filed in Buying / Selling a home, Website searching

Ask an assembled group of property owners when is the best time of year to buy or sell property. You are likely to get the answer that summer is the best time. However for whilst toy manufacturers and retailers know that over 50% of their business occurs in the last 2 months of the year, real estate agents are actually pretty busy selling property year round.

The fact is that property sales are actually less susceptible to seasonality than some may think. In the chart below the calendar year is laid out showing the peaks and troughs of sales – this data is showing seasonality; based on over 15 years of data from the Real Estate Institute.

The analysis has shown that month-on-month variation in property sales tends to fluctuate by far less than people perceive. March is the most active month of the year, with January being the least active. Taking a typical year and a total sales of say 8,000 in March. This would equate to 258 sales per day; based on the same market the figure for January would be less, but still a respectable 190 sales per day. As for the winter months – they would average around 216 sales per day.

Having said that sales are not that seasonal it may come as some surprise to learn that there are some hidden “windows” of opportunity during the year to list a home for sale! In fact when selling a property, the best time could be in the middle of winter, a time traditionally thought of as the worst time of the year for the property market!

The chart below tracks the seasonality of listing volumes (new property coming onto the market) and also number of people viewing property online. These important new sets of data have only recently been available as a function of the dominance of the web in real estate researching.

The activity of researching and viewing property online (in red above) hardly varies by much through out the year (with the single exceptions of the ever-present distractions of Christmas and the fast approaching summer holidays). For reference website traffic is measured across a basket of leading real estate websites including Realestate.co.nz.

The one surprising fact though highlighted from the analysis is the seasonality of new listings coming onto the market (shown in blue above). In this regard the behaviour of sellers is completely out of line with buyer activity.

The majority of new property listings tend to flood onto the market in February & March and again in October & November. Such is the surge that close to 40% of all new listings in a year, pour onto the market in just these 4 months in the expectation that this is when buyers are most active. Equally in contrast, those winter months of June, July and August show the lowest level of new listings coming onto the market falling to barely 20% of the annual total of all new listings hitting the market during the 3 months of winter.

So what does this analysis tell us as property owners and buyers, and what should you do to take advantage of this analysis?

Well thinking about it, there is an opportunity here for astute property sellers. For whilst the temptation is to list either in the spring or summer, grabbing the winter season could give your property greater exposure at a time when fewer listings are out in the market to compete with, and yet at the same time buyer interest does not decline to the same extent.

So maybe the best advice is be brave and be different, and just maybe that sale may come sooner than you think giving you the opportunity to be buying just as all the new spring season listings hit the market.

NZ Property Report – February 2010

Posted on: March 1st, 2010 | Filed in Featured, NZ Property Report

NZ Property Report - Realestate.co.nz The industry has long been expecting a surge in new listings and February answered that call. However the timing is not ideal as these listings are hitting the market right at the time that sales volumes have gone soft. The last month of 2009 and the first month of 2010 surprised the market with particularly weak sales with both months showing long term lows of 4,957 and 3,666 respectively.

The month of February is traditionally a very strong month for new listings. Two years ago a record level of 18,700 listings came onto the market – at that time sales were beginning to weaken heading into the recession. Also at that time the inventory of unsold houses was beginning to rise from 34 weeks in Feb ’08 rising to a peak of 57 weeks a year later.

The rise in asking price to $419,015 puts price expectations back on an increasing trend and does reflect the traditional increase seen in February. Clearly sellers and their agents are confident that the pricing will find a willing buyer market at these levels; somewhat of a challenge given recent weakness in the stratified median sales prices as reported by the Real Estate Institute.

The key focus for the market is the inventory of unsold houses which at close to 12 months means that there is ample opportunity for buyers to evaluate the property that best suits their needs in what is clearly a buyer’s market.

Asking Price

The vendor’s expectation of asking price for properties coming onto the market in February rose quite significantly from $405,040 to $419,015.

This price represented a 1.6% increase in asking price when compared to the moving average of the past 3 months (Nov/Dec/Jan).

The asking price of new listings in February last year was $413,337 representing a 1.4% year on year increase.

New Listings

The number of new listings coming onto the market in February rose sharply in what is traditionally a peak listings’ month. The volume represented a 47% increase on prior month and 24% year on year growth. It is also the highest single month for nearly 2 years.

Inventory

The level of unsold houses on the market at the end of February totaled 54,381.This represented the equivalent of 48.2 weeks.

This very steep rise in inventory of unsold houses is the result of the combined effects of a surge in new listings and sluggish monthly sales over the past quarter. Whilst the current level is 15% below the level at the same time last year unless sales volumes pick up or listings dry up then inventory could continue to rise in the coming months – clearly signaling a buyer’s market.

Regional Summary – Asking price expectation

Whilst the national asking price expectation showed a rise in truncated mean from $405,040 to $419,015 the regional variances were quite significant with 11 regions showing increases set against the recent 3 month average and 8 regions showing falls.

The main metro areas showed only marginal variances of around 3% or less with Wellington just 1.1% down. In provincial areas significant falls were seen on Gisborne, Marlborough and the Central Otago / lakes region. In the latter region the asking price expectation of %28,137 was the second lowest in the past 12 months.

Significant rises were seen in Southland, Taranaki, Otago and the Hawkes Bay. For the Taranaki region the asking price of $335,423 is an all time high.

Regional Summary – New listings

The surge of listings nationally amounting to a 47% month on month growth was seen most significantly in a key number of regions.

Most significant was Wellington which has for so long been running on a shortage of new listings – the regions saw a surge with over 2,000 listings, a level not seen over the last few years. Matching that level of new listings was Canterbury with a 34% year on year rise.

Regions seeing a fall in year on year listings were Coromandel, Central Otago / Lakes and Northland.

Regional Summary – Inventory of unsold houses

The steep rise in inventory on a national basis in February was reflected across the majority of the 19 regions which in the main are clearly indicating a buyer’s market.

The only three regions which are seeing a level of inventory of unsold houses below long term averages were Auckland which now has 30 weeks of stock, The Hawkes Bay with 32 and Wellington with just 18 weeks. All of these regions inventory levels are over 30% down on the same period last year

The areas of the country where inventory is significantly above long term averages were Northland (160 weeks), Central North Island (115 weeks), Taranaki (29 weeks) and Marlborough (74 weeks).

Lifestyle Property

A healthy 30% increase in listings in February with 1,113 new lifestyle properties come onto the market with an asking price expectation of $601,220 which is 7.6% up on prior year and 1.2% up on the 3 month average

Regions of the country seeing significant increases in new listings of over double as compared to prior year were the Hawkes Bay, Wellington and Marlborough. Only Northland, Gisborne and the Coromandel saw year on year declines in new listings.

Apartments

The apartment market had a very strong month with 747 new listings – the highest overall level of new listings for 2 years. Very strong listings came through in the Bay of Plenty and Wellington both showing year on year growth of over 100%.

The asking price expectation of apartments for February was $374,503 which was almost identical to a year earlier and just 1% up on the prior 3 months. The asking price in Auckland was $335,861 which was almost identical to a year earlier, but 2.6% down the prior 3 months.

The full report can be downloaded here (1.2MB pdf document). Additionally the raw data is accessible here as an Excel spreadsheet enabling anyone to analyse the raw data and establish any trends or observations. Usage rights are governed by attribution to the source of the data being Realestate.co.nz. The next NZ Property Report for March 2010 will be published on this website on Thursday 1st April at 10am.

Mortgagee listings show declining trend

Posted on: February 22nd, 2010 | Filed in Featured, Website searching

From the latest data it looks like the peak of mortgagee listings could be behind us. As at this time there are just under 300 listings on realestate.co.nz (lifestyle and homes for sale) that are being marketed as mortgagee sale.

Peaking in early 2009 at over 400 listings, the trend of decline began in the spring and continued right through to Christmas when there was a clear-out of unsold mortgagee properties which resulted in the stock level falling to less than 200. January and February has seen the number of listings pick up again, however the rise is a seasonal lift rather than an underlying increase.

The chart below shows the number of listings in absolute terms and also as a percentage of all residential listings. To be clear these statistics comprise residential and lifestyle property and exclude sections.

The number of listings as a percentage of all residential listings is key as the past few weeks has seen a significant increase in new property listings coming onto the market – in some extent a flood of new listings. The current level of mortgagee properties is less than half of one percent, that is just one property in every 200.

Matched to this decline in listings is a steady decline in the search enquiry for mortgagee listings. Over the past 6 months the number of search enquiry for the keywords of “mortgagee”, “mortgagee auction” and “mortgagee sale” has steadily declined. At one time over 1 in 10 searches were for these keywords – the past 3 months has seen this drop to just 6% – just over 1 in 18 of all keyword search queries.

The chart below tracks the past 2 years of the number of mortgagee keyword searches as matched to the number of mortgagee properties on the market.

A perspective of real estate search in 2012

Posted on: February 19th, 2010 | Filed in Buying / Selling a home, Technology

The first two months of this year has provided me with a clear view of the future of real estate; and at the same time provided a view of the leap that I think we will collectively take in the application of technology in the property market. This clarity has come as a result of a couple of key signals, the first of which came from the single defining message from the Inman Connect conference in New York at the start of January – the message loud and clear was MOBILE.

Mobile, as in the always-accessible, real-time, comprehensive, location-aware data to enable buyers to be more efficient in the property searching process to find that perfect home.

Secondly we have witnessed the birth of not just a new product, but a new category in technology. I am speaking of course of the iPad. I am confident this new product will spawn a new category for information and media consumption. The new Apple device whilst being derided by some as just an iTouch with a bigger screen, for me is the first computing device built as a reading device that is not derived from the humble typewriter. If you cast aside smart phones for the moment for their limited screen size; the iPad is the first accessory that is designed to be viewed, read and used to help us make sense of information. It is not compromised by a clam shell construction and a 19th century keyboard structure.

Rightly as some will argue the iPad will not become the instant hot item as the iPhone was; but give it a few years and let a few of your friends get one, and before long the iPad and the “me-to” devices that will undoubtedly spring to life will hold a serious role in consumers’ lives in the coming years.

So the question then is – how could this device and its competitors change the world of property search? To think this through, visualise for a moment a day in the future, some day a year or so from now when you are looking for a new home.

You will be walking across the road to the open home having utilized the turn by turn driving instructions in your car downloaded from the web app to get the travel sequence for today’s open home schedule for the 3 properties you wanted to check out. The app also conveniently worked out and recommended a convenient cafe on the route for you to have a quick coffee.

The long black and flat white was all the better for the online promotion code and the service more than merited a recommendation easily uploaded through the iphone app as part of the open home schedule.

Approaching the open home you activate the record device on your iPhone to capture images and comments pertaining to the layout of the house – all contextually linked to the dynamic floor plan of the property. You calmly wander through the house having by passed the registration book as an established client with the real estate agent.

No need for open home brochure here, as the agent had already provided all the necessary reports including LIM, valuation, title record and Zoodle report on the community and amenities. All accessible and stored online for easy reference.

The open home “host” reminds you politely for the completion of the open home survey which has already been triggered by the iPhone app. The open home “host” now has a complete list of attendees at the property through blue-tooth & RFID matching to enquirers interested in the property.

Leaving the property your attention is drawn to the property across the road. Accessing the Zoodle app you verify the property ID through the augmented reality and having already set up a 3 month subscription service to the Zoodle data you are instantly provided with sales history and current valuation on the property as you stand facing the house. The data certainly gives you confidence that the home opposite, the one you are keen on is reasonably priced.

Returning home you relax in the lounge and complete the open home survey on your iPad, providing the listing agent with comments on all aspects of the house. You also take the opportunity to provide an indication of what you think the property is likely to sell for. You then have the chance to review the property combining the agent provided details together with your own images and notes recorded during the open home visit making for a comprehensive portfolio about the property all stored and accessible on the “My Property” section on Realestate.co.nz.

With all the relevant information you could need, you are now ready to contact the agent to discuss an offer – you conference in the agent and your solicitor and make an offer – all electronically – of course!

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