The Unconditional Blog

The impartial voice of the industry


Archive for the ‘Buying / Selling a home’ Category


Is NZ facing an impending property crash?

Posted on: February 17th, 2008 | Filed in Buying / Selling a home, Media commmentary, Money Matters, Property Investing

As has become the norm over the past 12 months the newspapers and TV are cluttered with articles prophesying impending doom as NZ property teeters on the brink of a property collapse – the questions is – are the reports and prophecies going to become self-fulfilling or is rational sanity going to prevail?


The facts are very clear, the property market has slowed significantly and prices are not rising as fast as we have been accustomed to over the past 2 or 4 years. However it is a fact that over 5,000 properties were sold in January so clearly there are people looking to make that step and buy property, equally there are over 57,000 properties currently advertised on this site (There are currently 53,300 homes and 9,600 lifestyle property listings on the site, within this are multiple listings of a single property as properties being sold by more than one agent are advertised separately) – clearly this indicates that there are sellers looking to move for whatever reason.

It is a well known fact of any market, be it property or shares or any commodity that in-spite of the trend there will always be buyers and sellers entering the market for differing reasons, it just may well be that the current property market is more interesting to seasoned professional investors with ready finance who are keen to seek bargains rather than a year ago when it was more likely to be less well informed opportunist seeking to “jump” on the property band-wagon.

A couple of articles have sighted the rise in the listings of mortgagee sales on websites, this is true for Currently we have 100 properties featured as “Mortgagee Sale” – a year ago we had 63. Does that mean that we are seeing a 60% increase in the prevalence of mortgagee sales? – there is no statistical proof. Mortgagee sales happen all the time for many reasons and whilst there is no doubt many property owners (not necessarily home owners as the properties concerned may be speculative investment properties) are suffering under increasing debt it is not close to the scenario in the US. The situation in the USA was driven by the most lapse of financial systems and fueled a mega-surge in new property development which is mostly where the pain is being felt right now.

Rather than look to the US for the prediction of where the NZ property market might end up, I think it is better to examine the UK market as the picture there is surprisingly similar to NZ – possibly a few months ahead of us.

UK house prices fell for the third month in January by 0.1% to 180,473 ($451,200) (as stated in a recent Bloombergs report), however they still show a 4.2% increase over this time last year (NZ year on year prices are up 3.97%). Already interest cuts are being predicted of between 0.25% and 0.5% over the next 6 months as the credit crunch has impacted on the economy as a whole and property in particular.

Despite this situation, the UK market is predicted to see prices to drop by around 5% in 2008 – a realistic picture given credit tightening and the current trends. This I would judge to be a rational prediction rather than the NZ snake oil merchants parading as property market experts who talk of 25% falls in prices. The UK property market is underpinned by the same foundations as the NZ market – their economic outlook remains strong, demand for property far outstrips supply and they have low unemployment. Just last week the Royal Institute of Chartered Surveyors stated :

“In the near term, the housing market will continue to be shielded from significant price falls while employment conditions are strong”…”if mortgage lenders filter the recent interest rate cuts into the market, demand should begin to increase”.

For NZ we face continuing high interest rates, it is unlikely that we will see cuts in these rates until the 2nd half of the year when there will be a fierce competitive battle again as large component of fixed term mortgages come up for renewal, this however will be in the middle of the election campaign which traditionally is a slow time for property sales.

So as ever interpreting all this information is difficult as just with Lotto if we knew the future we would win every week! – however it is realistic at this stage to say that the indications are for a very slow property market in 2008 – sales well down on 2007; with the likely hood of property prices of property ending the year at or just below the levels today.


Web statistics clearly show a very slow property market

Posted on: February 10th, 2008 | Filed in Buying / Selling a home, Real Estate Industry, Website news

The fact is that as at the end of December 2007 there were just over 60,000 properties for sale on amongst the total of 99,000 listings in total. The balance being Commercial property, Farms and Agricultural land and Businesses for Sale as well as Property for rent.

The website is subscribed to by over 1,300 real estate companies across the country and represents close to 90% of all listings by licensed real estate agents, thereby anointing the website with the title of the most comprehensive website for property in NZ and also a very critical ‘bell weather’ to the ‘lead indicators’ of the property market.

By analysing the sales statistics from REINZ and cross matching it with the listing stock on the website you quickly build a picture of the current state of inventory in the NZ market for property.

In the space of 12 months through 2007 the level of inventory rose from around 4 ½ months at the start of the year to 8 months stock at the year end, this growth was most pronounced in the second half of the year, shooting up from 5 ½ months in July.

In absolute terms the number of houses seeking buyers has risen by over 10,000 (June 50,134 to December 60,427). The figure at the end of January was slightly down at 57,525 however we will have to wait until the January statistics are released by REINZ to see if this reduction in stock was reflective of sales or withdrawals.

So what can we glean from the data as a key indicator of the state of the real estate market?

Clearly with a stock level of around 8 month worth of sales – the supply far outweighs the demand with a consequential ability for buyers to be patient and selective – allowing them not to be panicked into a buying frenzy as was the case over the past couple of years. As for sellers, the competitive effect of this amount of stock of potentially alternative options for buyers means presenting a property in the best light to attract a buyer and then ensuring that price expectations are realistic. A reality is that properties are selling – just not in the amounts that they used to so if you plan to sell, you need to be realistic to the market.

However as with any statistics caution needs to be applied as these statistics are broad based across the whole country, and just as there is no median house, so there is no marketplace for all 57,000 properties. The fact is that real estate is a local market.

Looking on a regional level, not surprisingly the analysis shows up some interesting variances:


Immediately you are drawn to the regions of Northland and Central Otago Lakes with nearly 2 years and 1 year’s inventory respectively; both of which are areas with a active tourism impact and which have been subject to extensive development over the past few years.

At the other extreme Otago and especially Southland record the most modest growth in inventory and low actual stock levels, Southland the lowest inventory in the country at the end of the year with just 4 months. The two areas of Auckland and Waikato / BOP represent collectively 49% of all the inventory and therefore mirror naturally the national figures. Wellington which is normally considered to be a market immune to peaks and troughs certainly seems to indicate a real growth in inventory from around 3,700 in the first quarter of 2007 to end the year at just on 5,000 properties on the market.

Whilst the January sales figures due to be released this week will indicate the likely trend for 2008, it is pretty clear from all other indicators that the property market has slowed considerably, the Auckland sales reported by Barfoot & Thompson for January being some 40% down. January is traditionally one of the quietest months and an indicative figure or between 4,500 and 5,000 sales across the country for the month would seem likely. This would be a 40% decline and be the slowest January since the early 90’s.

It is proposed to update these inventory statistics on a regular basis on Unconditional – subscribe to an RSS feed to ensure you are kept informed on this and other subjects on the real estate industry.


Open homes are the shop window of Real Estate

Posted on: February 7th, 2008 | Filed in Buying / Selling a home

Open homes have become the shop window of the real estate industry, and just as business meetings have migrated from the board room to the local cafe; the fact is you are far more likely to meet a real estate agent at an open home than at their office.

So it is therefore surprising to read in a recent industry article that a survey from the National Association of Realtors in the US shows that despite the fact that 48% of all home buyers go to open houses, when they were asked where they learned about the home they purchased, “open house” did not even show up in the responses.

Statistically speaking, open houses don’t sell homes – that is what the survey appears to say!

I suspect that this is not the case. Open homes serve a valuable purpose for all parties in the real estate transaction process.

The vendor sees an open home as a perfect showcase for the property – strongly influenced by their agent’s view of the value of open homes (more on that in a second). The establishment of a dedicated time for the open home provides a highly efficient means for the property owner to prepare their open home to look its best – clearing away clutter and adding those inviting touches of flowers and baking aromas!

Prospective buyers love open homes for a couple of reasons. Firstly web site images and glossy brochures only provide the tempter – you have to get a feel for a property not only every aspect of its look and feel but also the context of the location in the street and the neighbourhood – information which is rarely shown in any marketing material. Secondly open homes are non-threatening for prospective buyers who these days really don’t want to deal with agents until they are ready and have investigated all the options.

The real estate agents love open homes (well most do) – they provide a showcasing of their vendors property, but in some way they are a far more valuable way of establishing leads of prospective clients – after all who visits open homes in the main? – people who are looking to buy and therefore probably will be needing to sell! – so the warm and engaging greeting by the agent is genuine, they certainly want to sell that home, but they also want to sell your home!

In addition an open home provides valuable feedback from prospective buyers to the condition of the house as well as indicative price. They certainly are time consuming for the agents requiring most agents to work 7 days a week, a factor not appreciated by many who assume real estate is a weekend job, whereas in fact the weekdays are dedicated to prospecting, facilitating transactions and negotiating selling agreements together with marketing, with the weekend being the showcasing time.

The open home is and has been for many years a key part of the process of real estate not only here in NZ but in most parts of the world, with a few exceptions one of which being the UK which still manages most viewings by appointment. Despite the advent and meteoric rise of the internet there is no substitute for a good walkaround of a property to effectively “kick the tyres” – the only thing missing is taking the prospective house for a test drive – after all you wouldn’t fork out one tenth the cost of a property on a car without a thorough test drive and independent inspection.

Related articles on which may interest you:

A Guide to Open Homes

Property Inspection checklist


The Joneses – “virtual” real estate or “real” real estate?

Posted on: December 14th, 2007 | Filed in Buying / Selling a home, Media commmentary, Online marketing

The news that The Joneses are planning to list on the stock exchange next year is in someways not surprising. It has many of the hallmarks of a “venture capital funded” / “new business model enabled” IPO. Initial investors are keen to see their risk capital rewarded by a broader share ownership which will afford expansion opportunities as well as realisation of early gain in value.

The enticing figure quoted by Chris Taylor of enabling investors to secure a share of a $1.2 billion market will certainly sow the seeds for a healthy interest in the reverse listing.

What caught my eye was a reference in the article on Stuff that stated that The Joneses planned to branch out into “second-tier” markets, and hoped to have 10 -15 offices in the next few years.

Now my understanding of the business model of The Joneses is that of a “virtual” real estate company – there are no offices of The Joneses on the high streets of Auckland, Wellington, Christchurch and Dunedin – they are a highly developed customer management and marketing business that creates demand through advertising to meet the supply created through exceptional service – that’s the idea at least as I read it, so what is with this idea of 10 – 15 offices??

I personally share the views expressed very well by Mike Green – the MD of Harcourts on his blog that there is a very real prospect in the future of high streets devoid of real estate agents. Expensive office space is currently used to “house” real estate agents who seldom spend any time in the office. Additionally the days of prospective buyers wondering in to offices to find out what was for sale have been completely replaced by online searching.

So what are the future plans for The Joneses?


So what price is that property on the site?

Posted on: December 9th, 2007 | Filed in Buying / Selling a home, Money Matters, Online marketing, Website news

It is the question that ever visitor to our site asks – if not directly to us by email, then at least to the screen in front of them?

If I could do one thing for this site it would be to make sure that every property featured had a price.

Homes for sale are not like cars, where there is no question that a 4 year old Honda Accord is worth $20,000. Every house on the other hand is unique and therefore only the classic market forces of supply and demand will establish a price. We want to work to improve the transparency of pricing on all of the listings on the website to help you more effectively search.

To start with a useful piece of information for you to know. Every agent posting a listed on the site is required to provide us with either a stated price (which we display) or if it is being sold as a tender or auction or is just POA or Negotiation (or other acronym) , the listing agent must supply a price range. Armed with this information we deliver results for searches that you make on the site.

So if you search for homes for sale in Paraparumu priced between $400,000 and $500,000 you will see a selection (based on today) of 39 homes, only a third of which have a price, the rest are marked as “offers” or “negotiation”. All of these listings however were provided to us by agents who told us that the price range fell between $400,000 and $500,000. We do not, and would never try to be clever and add properties to individual priced searches for which we know the price range fell outside the range you selected.

Having explained this part of the site mechanics, it is clear that some agents select ranges that are just too broad. This is something we do not condone and we are constantly communicating with the industry to try and get them to price more openly all properties to help you – the buying public.


Selling your house online?

Posted on: November 26th, 2007 | Filed in Buying / Selling a home, Online marketing

Seems such an attractive proposition in this world of ubiquitous “always on” internet, just imagine the reaction of your friends as sipping that coffee you nonchalantly advise that you have just bought or sold a house – all from the comfort of the local cafe!

The reality is somewhat different – just to debunk the myths.

In New Zealand the transaction of land (and in most cases by default property) requires a written contract to be signed and a consideration (money) exchanged. contract-261107-sm.jpgThe process of buying and selling houses is however anything but easy and the exchange of a contract is the final stamp on what can be a very demanding and fraught process.

Therefore for a website to say that you can “sell your house” for xx dollars is being somewhat conservative with the truth.

Online is a medium for communication, a highly efficient and powerful medium – in the case of real estate it provides a very efficient means of advertising available properties for sale or rent – rich images, comprehensive information all go a long way to help prospective buyers find what they are looking for. But what it can never do is sell a house!

Having recently seen the proposed reform of the real estate agents act presented by the Associate Minister of Justice it surprises me that when they talk of the reforms being in the best interest of the consumer, why then did they not choose to address the issue of the role of some real estate websites and the services they offer?

It is very interesting to note that in the UK the Office of Fair Trading brought about the closure of a property website set up by Tesco (one of the largest UK supermarket chains) based on this position:

“If an internet property retailer does anything for their clients more than simply carry an advertisement, for example if their website has a message board for sellers to contact buyers, they will be doing estate agency work. It may well be that most internet property retailers are acting as estate agents.”

Clearly in the UK they feel that it is appropriate to protect the consumer and do so by providing the appropriate organisation with the teeth to act – here our government chooses to see only half the story and attack a section of the real estate industry (the agents), missing an emerging and significant component.


“Must sell – owner wants to take a bath!”

Posted on: November 22nd, 2007 | Filed in Buying / Selling a home

That is a certainly an example of a traditional attention grabbing headline by a real estate agent – at least a little bit “tongue in cheek”.

A change of personal and/or financial circumstances are obviously the main reasons why people buy and sell the family home and most of these changes have a time frame attached. But as this market slows and houses take longer to sell, the heat comes on and owners get anxious and unfortunately the For Sale sign bleaches in the sun.

The agent might change the copy then from ‘Vendor promoted to Paris – must sell” to “Desperate vendor flown to France – make an offer’.

What I wonder about this type of marketing is whether shouting ‘desperate’ or ‘must sell at any price’ gets results or more importantly gets the right results?

It’s certainly an attention grabber!

Investors and bargain hunters will reach for their mortgage brokers. But does it also say a very poor price is inevitable? Does the term ‘Desperate’ mean ‘Look over here – Vendor is about to take a bath’?

I guess it ultimately depends on whether ‘desperate’ means the same thing to the buyer and seller and whether the owner must sell at any price or needs to sell at a certain price?

There’s 30+ properties currently on the site today under the search ‘desperate’ – not all actually categorised as desperate to sell, this one in Johnsonville is just in desperate need of decoration! but these ceratinly fit the bill:

Taupo property – “Vendor said don’t make me sound desperate! – so we didn’t”

Onehunga property – “Urgent sale! Urgent sale!”

Murrays Bay property – “Help! A Desperate Situation!”


How slow will it go?

Posted on: November 16th, 2007 | Filed in Buying / Selling a home, Media commmentary

It’s now widely accepted that the property market in NZ has slowed down.

There’s been a lot of speculation in recent months about our property bubble, when it will burst and how loud the bang?

The media has been true to form with sensational headlines describing a housing ‘slump’ or ‘crash’ while the Chief Economists try to temper the media’s excitement saying it’s a market ‘correction’.

The question now is, how slow will it go?

We may not know the answer for many, many months but there are some known factors that may give perspective.

  1. Ongoing media commentary about ‘property slumps’ will contribute to sales and prices falling – the self fulfilling prophecy phenomenon.
  2. The Banks know this, which is why their Chief Economists will continue to be conservative with their predictions.
  3. Despite the slowdown, the Reserve Bank is still expected to increase the Official Cash Rate because of rampant inflation.
  4. The property market commonly slows in the run up to an election – people hold off making big financial decisions until the make-up of the new government is known.
  5. It’s almost election year but it’s likely to be a full 12 months before we know who will govern.
  6. Mortgagee sales and hard working kiwi families losing homes makes for great headlines but poor polling in an election year, so the government will be working to ensure there’s no bubble blow-out before November.

Since the speculation about the slowdown started, we have been closely monitoring traffic to the website, searches, listings, length of listings on the site and other indicators that provide market information.

Interestingly whilst the stock of property on the website has risen sharply over the past 6 months from 74,000 to now over 91,000 as a result of the slow up in sales, the traffic to the website has grown from 240,000 unique browsers to now over 265,000 last month.

Clearly the buying public of NZ are as is usual in spring actively thinking about moving home and the sale and purchase of a property, however this year with the transition from a sellers to a buyer’s market these consumers are more patient and are more actively using search facilities online. Spending longer to better prepare them with a deeper understanding of the market place well ahead of any prospective property purchase.

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