The February sales for Barfoot & Thompson as representative of a large portion of the Auckland market certainly seem to reinforce the view that there is life in the real estate market. Harking back to an analogy I used last year in a post which as ever with the benefit of hindsight was a little optimistic – not a buoyant resurgence by any means, more of a thawing of once frost-bitten fingers.
A total of 559 sales shows a 9% increase over January, however still 7% down on February last year – a time when clearly we were all seeing the signs of a fast slowing of sales volumes. As presented in the chart below the 3 month moving average sales volume (blue bars) shows a fairly flat level at 512 for the 3 months ending Feb ‘09 although as shown by the red line the rate of decline in sales is slowing and projecting forward should see volumes start to show a year-on-year growth from March, especially as March is traditionally a strong sales month. Not a rampant market by any means, but a more liquid market where buyers are more active than we have seen for the majority of 2008.
Making assumptions based on the typical share that Barfoot & Thompson represents of the NZ market it could be that national sales figures due out later next week from the REINZ might well show a figure for February of close of 5,000 sales. That would be a good performance when compared to January which presented an all time low of just 3,706 sales. We have not seen a monthly sales volume breaking the 5,000 barrier since May 2008. All of these indicators could foretell the fact that in volume terms we have found the bottom of the market.
As to property prices, well the commentary from Barfoot & Thompson says it all in the detail – the high end properties had a good month with 53.7% of the sales over $500,000 and 30 sales over $1m as compared to just 15 in January. The key issue is that using an average selling price as an indicator on such low sales volumes does naturally lead to the potential of an average price out of line with current trends.
The graph below illustrates this well in that the red line which shows the tracking of year on year price from Barfoot & Thompson data clearly can be interpreted as liken to having hit a rock in the road and veered off its normal trajectory.
If you put these monthly trackers against any sort of back-drop, i.e., an economic landscape, you can start to draw some more interesting observations. Until you do so, they merely reflect past conditions and are no indicator for the future. I’m sure if you compared this tracker over 10 years with the availability of credit, you could definitely see something worth talking about.
J.C.
Whilst I appreciate your comment and contribution, I am at time perplexed as to a constant desire by commentors to want this blog as with other blogs to somehow be the oracle of all knowledge and in some way to explain every facet of the economic and business world we live in.
I was reminded today of the shear unique complexity of the economic situation we are faced with today – a Nobel prize winning professor of economics was being interviewed by Harvard Business Review – he stated that whilst he could clearly see the forthcoming housing bubble bursting, he could and did not foresee the scale, pace or extent of the credit and financial market collapse or the international tsunami it would unleash.
I think it is important to take a dose of reality – this blog is as it states in the header designed to provide “Topical, informative and relevant comments and stories related to the real estate industry that hopefully will inform and provoke debate and comment”.
Had an interesting conversation the other day regarding sales volumes. We’re running at historically low sales volumes and anecdotally I’m seeing as many distressed vendors dropping to meet bargain hunting buyers as I’m seeing frustrated buyers reluctanly increasing their offers to meet stubborn vendors. This is a particularly fickle market, one day I hear about a great sale, the next a shocking one. I believe we’re at a crucial point right now and I sense a move either down or up in sales volumes…I’m just not sure which way we will go! I think a lot will depend on whether or not the US dollar collapses. If that happens soon there will be major panic obviously and volumes will fall. If it happens later, I reckon low interest rates will help volumes rise slowly until that (I believe inevitable) day.
Alistair, your comment:
“Harking back to an analogy I used last year in a post which as ever with the benefit of hindsight was a little optimistic – not a buoyant resurgence by any means, more of a thawing of once frost-bitten fingers.”
reminded me of this rather interesting article:
Hanging On, or How to Get Through a Depression and Enjoy Life (M.B., March 2009)
http://www.oftwominds.com/journal09/MB-depression3-09.html
To Steve Koerber,
IMO the main factor now is jobs here.
Alistair,
I would think that any contribution that leads to better understanding should be encouraged. In this case, we have a “professional” organization and media making “suggestions” based on a sales tracker. Anyone who uses trackers in business will realize that this is an over-simplistic and naive way of assessing future performance. People should consider this, even though it’s conveniently manipulated by some to present what they want others to see.
Steve Netwriter, your link is fascinating and certainly makes one want to review one’s spending habits. Yes jobs are crucial.