The Unconditional Blog

The impartial voice of the industry

 

Archive for the ‘Buying / Selling a home’ Category

9

Facts on the volume of property sales

Posted on: August 9th, 2010 | Filed in Buying / Selling a home, Featured, Media commmentary

Global Economy and Housing Meltdown around the WorldThe headlines today were focused to what is variously called a “stalled housing market” or the “Do nothing” housing market. However as is often the case, it is really important to look beyond the headline and rhetoric, and examine the facts.

The housing market has slowed enormously in the past year as measured by sales volumes. The trusted and consistent statistics for property sales come from REINZ. The Real Estate Institute collect sales data from all licensed real estate agents across the country on a monthly basis to provide their monthly report. Somewhere around 90% of all properties sold in NZ are managed by licensed agents giving the Real Estate Institute a very accurate representation of the current market transacted in the past month.

The latest data to hand from REINZ is for June 2010. In that month 4,575 property sales were recorded – down 24% from June 2009, however up 6% on the June 2008 sales results. For the first 6 months of 2010 a total of 29,844 properties were sold, as compared to 34,169 in the same period of 2009, a fall of 13%.

REINZ sales data

Clearly the table above shows the market in a very low state of activity, and potentially July sales figures could show a further year on year decline when the July figures are published on the 13th August, however what was most interesting in the articles on the market today was the quote by QV.co.nz Research Director Jonno Ingerson

“The number of house sales in recent months has dropped around one third from the same time last year, and is also around one third below the long term average. We are now approaching similar levels of sales as during 2008 at the height of the recession”

The quote is very interesting as it was not backed up with any factual sales data, nor has QV in the past referred to sales data. QV undertake their analysis of property prices based on Land Transfer documentation, this data clearly includes sales stats, however as the data set of these recorded sales is based on settlements rather than unconditional transaction records the data tends to cover an extended period which may span a couple of months given variable settlement terms.

To enable people to make informed decisions as to the state of the property market requires accurate information, if QV has a more accurate and up to date insight into the property market it would be great to see this information, especially if it does highlight sales down by 33%. I will naturally be very keen to anlayse and share this new transaction data on Unconditional, so I look forward to a response from QV to help provide insight if this data.

0

How best to promote your property to attract buyers?

Posted on: August 6th, 2010 | Filed in Agent Tips, Buying / Selling a home, Featured, Online marketing

Question marks croppedThere would not be many days go by when this question is not asked of me by friends and more importantly real estate agents. I am also sure it is a key question asked of almost all agents by vendors.

The reason why I believe that this issue is gaining greater focus is a convergence of market and media.

The property market is alive.. but not as yet firing on all cylinders – this year is beginning to look like a 65,000 sale year – as compared to last year which was a 69,000 sale year (but of course a long way away from 2003 which was a 120,000 sale year). This slow pace of sales is resulting in a high inventory of unsold houses on the market – today some 56,844 listings for properties for sale are featured on the website, equating to over 11 months of equivalent sales. The market therefore is tough for sellers – raising a property’s profile when there are so many others on the market is a challenge.

The other factor is media – the facts are clear and the trend is undeniable – more people, more of the time search online for property for sale. There will come a time when everyone will use online – today it is close to 80%. That does not mean that print advertising is dead, it just means it is not so relevant anymore and is no longer a necessity. The web is therefore the prime media for searching and finding property. However there is an interesting aspect of the web that is its greatest benefit and and at the same time its greatest challenge.

Tall poppies smallAs companies and individuals have found over the years the democratisation of the web means the advantages of scale are removed and everyone can promote themselves and their products and services to the 1.3 billion people connected online in our world. So the issue is no longer one of being online, it is about being visible and being found online. In the context of real estate listings online it is the question of how to stand out from the crowd – to be the “Tall Poppy’.

Everyone of the 1,800+ suburbs across NZ has an average 31 properties on the market – all such properties have anxious vendors keen to see how capable real estate agents address the issue of creating standout in this online world. The answer is that the smartest agents are already preempting this question from vendors and add into the marketing proposal a Premium Featured Listing on Realestate.co.nz and similar offerings on other websites. These standout adverts ensure your property is seen by prospective buyers who can’t fail to see the impact these premium spots offer.

Residential Flyer Vendor RE image fileOn Realestate.co.nz Premium Featured Adverts are restricted to just 3 per suburb and appear at the top of each suburb page. In this way the listing sequence of the results is not disturbed which from research we know is a serious no-no! As well as this exclusive featuring on the chosen suburb page the property is also featured in the district and region pages as well as one of 6 properties featured on the home page in rotation.

The results of this scale of advertising are significant – on average this type of advertising raises daily viewings of a listing by 10 times – so a normal 12 views a day turns into 120 a day. The adverts are featured for 14 days and clearly in that time the property is likely to be seen well over 2,000 times. To see the actual impact try clicking on the home page and review the daily traffic for any listing by checking out the viewing stats through the link marked “Property viewed xx times”.

The cost of this Premium Featured Advert is just $250 (inc GST) for 2 full weeks – compare that to the typical print advert which barely lasts for a day or so before falling victim to the recycling bin whilst the online advert is working hard 24 hrs a day for 14 days – added to which you know exactly what you get in the true number of viewings from online – facts impossible to glean from a print advert of a property.

Fancy trying this impactful advertising for your property – tell your agent what you want and he can arrange with us, or if you like, contact us and we will arrange through your agent.

2

Historical mortgage approval data exposes deeper insight

Posted on: July 21st, 2010 | Filed in Buying / Selling a home, Money Matters

A post earlier this month “Mortgage approvals data adds to the stable of valuable property stats” examined the recent trend in mortgage approvals as released by the Reserve Bank matched to recent property sales data from REINZ.

A question posed in a comment on that article asked the question as to the history of mortgage approvals and sales to see if it were possible to see more clearly when extensive refinancing by people looking to take equity out of a property ceased as credit tightening occurred and property price appreciation ceased.

The great benefit of hosting an open communication through Unconditional is being able to listen and respond to questions from readers – this is a great case in point.

The chart below tracks the full history of mortgage approvals as published by the Reserve Bank matched to property sales going back to the beginning of 2004.

Mortgage approvals 2004 2010

The chart I think perfectly demonstrates the history of the NZ property market from the perspective of leveraging the equity in the family home to free up cash for either consumption (cars, holidays, boats etc) or residential investment deposits. Through 2004 right up to the end of 2005 the rate of growth of mortgage approvals grew faster than property sales. The scale on the left and right axis are different, during that period monthly approvals for refinance and new finance grew from just over 25,000 to over 40,000 per month whilst sales were of the order of 8,500 per month.

Through 2006 and 2007, the two measures of property sales and mortgage approvals tracked very closely in trend terms with still a significantly higher number of mortgage approvals.

Strangely the 2008 year saw property sales fall, whilst mortgage approvals remained steady – this was the period when interest rates were dropped successively in late 2008 in response to the global economic crisis. Moving right up to date the last 6 months has for the first time see the level of mortgage approvals drop significantly below the trend of sales, currently with the latest monthly sales of properties around 5,000 per month with mortgage approvals of around 22,000 per month.

Update 22nd July

At the request of Tim Harris, the chart below tracks the data of mortgage approvals and property sales by month as a variance % for each month vs. the same month in the prior year.

Mortgage_approvals_- variance

16

June property sales signal continued weakness

Posted on: July 14th, 2010 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

REINZ monthly article headerJune signals the start of winter and traditionally sees sales volumes fall. In statistical terms June has a seasonality factor of -4.5% indicating that sales should be around 4.5% less than an average month. For 2010 the sales of property across NZ fell short of seasonal factors – well short.

In the month 4,575 properties were sold; down on May and also June last year. These figures are released by the Real Estate Institute (REINZ) from submitted sales data from all licensed real estate offices across the country.

Applying this seasonality factor, June sales were down 3.6% on May at a seasonally adjusted level of 4,790. Tracked on a seasonally adjusted basis over the past 5 years clearly shows not only where the market is, but also where it appears to be heading with clear sections highlighted to show trends.

Seasonally adjusted sales to Jul 2010

To provide insight to the state of the market as judged in volume terms the chart below tracks June sales for each of the past 10 years. The chart not only shows the relative scale of the market but puts 2010 sales only just above the lows of 2008.

REINZ property sales for NZ - June

It now seems clear that the 2009 sales recovery was more a bounce back driven by a weakness of pricing combined with a segment of sellers that were forced to sell, 2010 now seems to signal a significantly quieter level of market activity.

Taking not just a single month but a 6 month period assist in removing monthly anomalies and shows how in the first 6 months of 2010 total property sales have totaled just less than 30,000. At 29,844 these first 6 months of 2010 are lower than the first 6 months of 2008 which were only slightly higher at 29,870.

REINZ 6 month sales of NZ property 2000 to 2010

As the chart above shows this level of first half year sales places volume at the lowest level since records began with REINZ back in 1993.

Whilst there is no denying the significant change that has occurred to the consumer attitude to debt allied to property investment and borrowing in general over the past 2 years as a result of the global credit crisis and Great Recession, the impact on property sales seems to be more pronounced than would have been expected by this factor alone. There is strong evidence now borne out by these sales figures that a sector of the property market is either sitting on the sidelines or taking a significant period of time out – this sector being property investors. For looking back their influence on the market in the period of 2002 to 2007 is unmistakable.

However what is interesting in analysing property sales figures is to stack them up against the number of dwellings in NZ to look to what extent the frequency of property turnover has changed over the years. Taking the census data for the number of dwelling as the base in each of the past 18 years and applying the moving average total of property sales presents the following chart with the measure of the % of all dwellings transacted each year.

Property sales of dwellings Jul 2010

The last couple of years not only show significant lows as compared to the peak years of 2002 to 2007 but also measured against the more “normal years” of the 1990′s. The current level at 4.2% of all dwellings transacted per year compares to the long term average of 6.3%.

5

Mortgage approvals data adds to the stable of valuable property stats

Posted on: July 13th, 2010 | Filed in Buying / Selling a home, Featured, Money Matters

Calculating financial dataAn overriding principle of this website of Unconditional as a complement to the listings website of Realestate.co.nz, is to provide timely and informative insight into the state of the property market, and with it the key statistics that can assist in better understanding the market.

We provide through the statistics from the realestate.co.nz website the NZ Property Report which looks into the supply and inventory of the marketplace – how many new properties are coming onto the market and how much stock of unsold houses are on the market.

To this we also analyse the monthly sales statistics from REINZ as well as the stratified house price index.

It is very clear from the latter statistics, especially volume sales that the NZ property market is either (dependent upon your perspective) in a depressive trough or operating in a new normal.

The chart below summarises the NZ Property market across the best part of two decades. The red line indicating the moving annual total of property sales (right hand axis) with the blue line indicating the value of those transactions (left hand axis).

NZ Property sales moving annual total 1993 to 2010 Realestate.co.nz

The latest data to May 2010 shows that in that preceding 12 months 66,769 properties were sold, whilst this is up from the low point of the year to February 2009, when a total of just 53,520 properties were sold, there has been a noticeable recent decline which followed a period of improving sales coming out of that bottoming of sales. Preceding that was the nearly two year decline in sales which took annual sales from 106,243 in the year to April 2007 to the low point in February 2009.

As ever making objective assessments of the future direction of the market is not an exact science and is why many respected economists and academics are reluctant to make such estimates preferring to let the current direction of trends from a variety of sources help point the way; one such set of data being discussed recently has been mortgage approvals.

Mortgage approvals are statistics released by the Reserve Bank, and are collected from a survey of 7 registered banks and provide statistics of the weekly volume and value of new credit lent for the purchase of property. The chart below tracks such data in terms of the weekly number of mortgage approvals on a 4 week moving average for each of the past 3 years.

NZ Mortgage approvals 2008 to 2010 Realestate.co.nz

Very clearly new mortgage approvals are running considerably lower than the prior 2 years. Whilst the fact that they are low would not come as a surprise, what is somewhat surprising is the fact that they should in theory mirror the volume sales of property over the same period. Tracking monthly property sales over the past 3 years on a similar chart as shown below does not produce that mirror image.

NZ Property sales 2008 2009 2010 Realestate.co.nz

This would seem to indicate that mortgage approvals are not exactly correlated to property sales. Reading the inclusions and exclusions of the data from the Reserve Bank does help to provide an explanation.

The mortgage approval statistics include both refinance to another bank as well as where the liability holder changes as in the case of sales to family trusts.

Whilst the specific details are not available it would seem to indicate that the property market is being typified by far less refinance switching between banks and potentially less trust transfers as home owners as borrowers seek to manage their current mortgage, without hunting around for refinance deals. This would be especially true as switching banks for refinance could open up issues such as debt to equity ratios when the property value may have fallen in recent years.

Another factor behind the lower mortgage approvals rate to property sales rate could well be the first signs of “Baby Boomers” selling down properties for which a new property could be funded mortgage free.

As ever richer information in the form of property statistics can be helpful to make better informed decisions in the market, and thereby ensure clarity and comprehension.

2

Mortgagee sales still show the drawn out effects of “The Great Recession”

Posted on: July 5th, 2010 | Filed in Buying / Selling a home, Featured

iStock_000007731653XSmallRecent statistics would certainly point the way to an improving ecomomy with the March quarter recording a 0.6% growth following a 0.9% growth, however the sober reality as Bernard Hickey describes it, is, in his judgment a Clayton’s Recovery – the recovery you’re having when you are not having a economic recovery. The reality is that for people caught with a large debt burden then this “recovery” is not feeling too good and the latest data for mortgagee sales certainly supports this view.

Over the first 4 months of 2010 a total of 765 properties have been sold as mortgagee sales – where the owner has defaulted on the terms of the lending agreement and the lender as the mortgagor has sort to recover as much as the debt as possible through a mortgagee sale. This total of 765 compares to 726 for the same period in 2009 and 246 in the first 4 months of 2008 before the Great Recession began.

Whilst the scale of mortgagee sales show little signs of abating the rate of growth seen over the past few years appears to be slowing and the outlook should be brighter in the medium term. A key indicator of the future scale of mortgagee sales is the inventory of mortgagee properties featured on Realestate.co.nz. The chart below tracks the weekly total from 2007 to the present day. Currently there are 279 mortgagee properties comprising homes, units, apartments and townhouses as well as lifestyle properties.

Realestate.co.nz mortgagee listings 2007 to 2010

The chart certainly highlights that the peak of the market for new listings of mortgagee properties was back in 2008 & 2009, the calmer days of 2007 are still a long way off.

Another key indicator of the mortgagee market is the degree of searching on the web for mortgagee properties as an indicator of demand from investors or general buyers looking to capitalise on stress in the market to negotiate for a property. The website of Realestate.co.nz tracks all keywords used on the site – some 500+ every week with over 8,000 weekly specific keyword searches. Amongst the most actively searched over the past couple of years have been the phrases around mortgagee property – mortgagee sale, mortgagee auction, mortgagee. The chart below tracks these weekly searches and matches the volume to the weekly inventory of mortgagee property on the market.

Realestate.co.nz mortgagee searches and listings

2

Winter property market opens up opportunities

Posted on: June 20th, 2010 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

House in winter croppedWith Queen’s birthday now well behind us, we characteristically hunker down to see ourselves through the longest stretch of working weeks now until the Labour weekend – still some 18 weeks away!

This stretch through the dark winter months may be punctuated by overseas warmth, but it is worth remembering that whilst people may not be strolling along the beach they are actually still buying property.

As cited earlier this year in the post “Is summer really the best time to sell a property” there is good reason to try and sell your home through the winter months, as it is not as dead a time as most people think. The simple fact is that the property market does take a slight breather through the June to August period, by no means does it disappear. The chart below very clearly shows the proportion of a total year’s sales by month (red line) matched to the proportion of total year’s new listings by month (blue line).

Seaonality of sales and listings in NZ

Both listings and sales do dip during the winter, however the dip in new listings is actually more significant than the dip in sales. Such a gap between the two lines does highlight an opportunity as it provides the ability to make your property stand out against the market, when during the winter there are less new listings coming onto the market.

Now clearly the property market is relatively quiet at the moment as the latest data from the Real Estate Institute showed in releasing its May sales data last week. The total for the month of May at 5,206 was up just one single house sale on the April total, but down over 1,000 on May last year. The seasonally adjusted figures showed a 5% decline between April and May. However the fact is that in May there were still 168 houses sold every day. Over the months of June and July and into August these sales will continue, which will mean that between now and Labour weekend we could see a further 22,000 properties sold. The question is – will yours be one of them?

NZ Property sales 2005 - 2010 REINZ Realestate.co.nz

0

Seasonally adjusted property sales

Posted on: June 5th, 2010 | Filed in Buying / Selling a home, Market News

The release this week of the May NZ Property report provided us here at Realestate.co.nz with the opportunity to update one of the key measures of the report – the level of inventory of unsold properties on the market. We have chosen to switch to quoting seasonally adjusted, rather than raw data. This was prompted by review meetings with economists, whose recommendations, I certainly take on board.

However I was approached a couple of times this week to be questioned why we had taken this route when seasonally adjusted data can be seen as “smoothed” or at worst “manipulated”. The view put forward, was that it was best to state the facts and let people make their own assessment. My answer to the question was in some ways supporting and in someways opposing. The NZ Property Report does publish actual data of new listings coming onto the market in the past month as well as actual asking price. The decision to make the inventory stats seasonally adjusted is that it is a calculation, based on actual inventory and actual sales. The issue is that there is a timing factor in the sales data, whereby the two sets of data are out of alignment.This has the potential to distort the inventory statistics.

Reflecting after these questionings I was drawn to want to share some insight behind the differences between actual and seasonally adjusted data. So I have taken the opportunity with the latest Barfoot & Thompson data for May to cast some light on the subject in order to assist greater understanding.

The report from Barfoot & Thompson highlighted the “rise in sale volumes to 792 in May, up on April’s 671 deals but still well behind the year’s peak in March of 927 deals”. These are the actual sales levels, by comparison the seasonally adjusted data shows that May sales were 745, up on April which was 723 and also up on March at 712, in fact the first 5 months of 2010 has seen a steady albeit very slow rise month on month of sales (seasonally adjusted) for Barfoot and Thompson as the largest real estate company in the Auckland region. The chart below shows this particularly well. The critical fact is that by seasonally adjusting the data allows for a true like-for-like comparison between one month and the next.

Barfoot & Thompson seasonally adjusted sales 2010 Realestate.co.nz

The calculation of seasonal adjusted sales in this case is made using Barfoot & Thompson own data for the past decade. The inescapable fact is that the property market does move in seasonal cycles through the year, added to the ever present reality that there are different number of days per month which will naturally effect sales numbers.

What is interesting is to look at the seasonal factor for the Barfoot & Thompson data represented in the chart below. Clearly March is traditionally the biggest sales month with nearly 11% of all annual sales whilst December languishes with just 6.5% of sales – in theory an average month would be 8.3%.

Barfoot & Thompson seasonal sales 2000 to 2009 Realestate.co.nz

Looking at these statistics reinforces the assertion put forward in a prior Unconditional post that Summer may not be the best time to sell a property; because as you see the level of winter activity is pretty consistent, the 5 months through June to October represent a a steady 8.3% average – equal to one twelfth of the annual total.

0

Extensive property reports on Zoodle further empowers buyers

Posted on: May 26th, 2010 | Filed in Buying / Selling a home, Featured

Property expert evaluation fixed v2Undertaking a detailed analysis for a property you might be interested in buying  just got a whole lot easier thanks to Zoodle. New reports have been made available on Zoodle which allow more extensive review and investigation of individual properties that may be on your wish list.

We have been listening to feedback and appreciate that for active property investors and researchers, keen to capture key raw data on a number of select properties, the current portfolio of detailed individual property reports may not match their exact needs. What people told us was they wanted to go shopping for a key data on a number of properties – kind of like bite sized morsels rather than a full meal, so we have established a much more comprehensive menu of reports

So in addition to the comprehensive property reports (sample report here) and valuations that have previously been available on Zoodle, you are now able to shop for specific records and details for individual properties. These records comprise the following:

(Note: These reports may not be available for all properties – however you will be able to see before making a purchase decision which are available for which properties.)

Certificate of Title

New Certificate of Title for a NZ property on ZoodleThis report details the legal owner of the property and shows everything registered against the property title. The Certificate of Title details whether there are any Mortgages, Leases, Easements, land usage restrictions, or other interests registered against the property title. It will also tell you whether the land is freehold or leasehold. The Certificate of Title comes complete with a diagram, it will include a separate page with a simple diagram of the deposited plan of the property, normally showing the property’s area and dimensions. This report costs $11.25 (inc GST) – you can download a sample report

Rating Valuation

This simple but important single piece of data is available for the majority of properties containing the rating valuation, the land value as well as the value of any improvements. Just $2.95 per property – view a sample report

Previous sale price

This report provides the previous sale records for the property. It contains date of sale, gross sale price, net sale price and details of any chattels; in addition it details the rating valuation at the time of sale including the land value. Just $3.00 per property – view a sample report

Local sales

This report provides a summary list of up to 10 sales within 1 km of the property in the past 12 months. For each property the records include the street address, the rating valuation, the date of sale, the gross and net sale price. This report is $14.95 – view a sample report

Zoodle provides a rich resource covering all New Zealand residential property with free reports to download and be distributed by email. In addition there is comprehensive details on local communities, with vital statistics on the local property market as well as census data to enable informed decision making on property investing right across the country.

21

Is Auckland unaffordable for first time buyers?

Posted on: May 17th, 2010 | Filed in Buying / Selling a home, Website searching

The excellent Personal Finance section of the Weekend Herald hosted by Mary Holm featured a letter this week from a 25 year living in Auckland earning $62,000 a year and asking the question – how could he and his wife possibly afford to buy in Auckland where as he states in the letter the average house price is around $500,000. He states that his weekly net income is $806 after tax, student loan and kiwi saver. He judged that something was out of skew and that possibly house prices might have to go through a correction.

This letter naturally got me thinking. Firstly if this question was universal to all 25 year olds or to all first time buyers then the market would very quickly come to a grinding halt and have to re-adjust prices for without first time buyers the market would have no fuel at the bottom end to stoke the engine.

Secondly there always seems to be an assumption or over simplification that if the median price is $470,000 (the actual Auckland figure for all sales in April from REINZ) then somehow this is the cost of houses in Auckland – it is only the mathematical median price. Of the 1,768 houses sold in Auckland in April 884 were sold at a price above $470,000 and 884 were sold at a price below $470,000.

In the spirit of helpful assistance I though I would assist this 25 year old find a suitable property they could afford on their single income (they are thinking of starting a family soon so rightly want to budget for one income).

Here then are some options.

How about the central city suburbs – Grey Lynn is a nice area. This 3 bedroom house is on at $399,000. According to the Westpac mortgage calculator on the site this with a 5% deposit of $79,800 would cost $424.91 a week based in the current interest rates for a 30 year mortgage.

Maybe the central city does not suit so how about the North Shore. This 2 bedroom apartment in Albany is only $246,000 – with a $49,200 deposit this would cost $261.97 a week based on a 30 year mortgage at the current mortgage rate of 5.65%

How about out west Auckland – here is a modern townhouse, 2 bedrooms at $259,000 in Glen Eden. With that 20% deposit of $51,800 this property would have weekly repayments of $275.82 on a 30 year mortgage.

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