Running the website of realestate.co.nz gives us some valuable insight into the property market – providing us with some hard facts, some interesting statistics and some anecdotal feedback from within the industry.
One thing I am keen not to develop is a reputation as a forecaster of the property market. Firstly; one thing about forecasting is that it is likely that you will be wrong more times than you are right. People then tend to remember the time you got it wrong far more than the time you got it right – I did once make this somewhat optimistic call back in 2008 “NZ property market may well see a brighter outlook sooner” – at least I used the word “may”!
Even economists are skeptical about forecasting the property market, and they make a living from forecasting!
However I am conscious that there has been a series of recent articles that show some general improvement in sentiment. The level of mortgage approvals brought some brighter comments from Interest.co.nz as did some greater competition among the banks with competitive activity around 2 year fixed rates. In addition First National Real Estate were quick to pinpoint some upturn as did Harcourts recently. Barfoot & Thompson have also just released their sales details for the Auckland market showing a considerable pick up from October.
The data I tend keep a close watch on, are unique stats from the web – a rich vein of real time information tracking real people looking at property. The two metrics which for me reflect the level of activity are (i) number of visitors online viewing real estate and (ii) the level of email enquiry to agents, the latter being closer to a lead indicator of future activity.
Usage levels on real estate websites
The chart below tracks the indexed web traffic to a basket of real estate websites monitored by Nielsen. The data is domestic traffic only and covers all of the top 10 real estate sites online. The blue line shows the performance of 2010 measured on a 4 week moving average, with the prior years of 2008 in black and 2009 in red.
The use of an index in the chart, rather than actual traffic, effectively removes the factor of the ever growing usage of the web – more people using the web, more of the time.
The conclusion I draw from this chart is that, as we have been aware, the past 12 months has been subdued. In many ways, very much like the depressed market of 2008 at the time of the Global Financial Crisis. By contrast the activity in the market during 2009 is very evident from the chart, showing heightened activity as buyer initially pounced on distress sales as prices fell, and then with limited stock, we saw some scarcity demand factors. This heightened activity did begin to seriously tail off towards the end of the year.
What we are seeing now though, is some relative sustained activity in searches during November, whereas this time last year the activity was really tailing off. The next few weeks through Christmas will naturally see a slowing down of viewing, but come that first and second week of January the level of activity online skyrockets!
Serious enquiry to agents
On a daily basis we are sending hundreds of emails to agents from interested prospective purchasers of property – these are warm leads and the tracking of this activity provides an insight into the market. As with the stats on website visitors, this chart below which shows weekly email activity is indexed to provide a more accurate view year-on-year as traffic and usage of the site keeps growing.
The blue line for 2010 clearly reflects the extent of the lackluster property market this year, with much lower levels of email enquiries. Whilst showing a tailing off in the past few weeks (which is only to be expected from a seasonal perspective), the tracking of 2010 does show a certain degree of relative strength, especially through that key period of late October through to mid November. The traditional lead time from email enquiry to property transaction would based on these strong periods, give sufficient time to complete transactions pre-Christmas. This might bode well for the sale figures for November and December, this then ties back into the recent rise in mortgage approvals.
Classically we will have to wait to see if what we are seeing is a true trend or just a short term blip. What is certain is that we are seeing some key indicators begin to point to a brighter outlook. I am certainly not going to call it a resurgent market quite yet!