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Archive for the ‘Featured’ Category

4

Are we about to see another property price bubble?

Posted on: March 14th, 2012 | Filed in Buying / Selling a home, Featured, Media commmentary, REINZ Monthly data

The weekend opinion piece by Bernard Hickey published on the NZ Herald (Bank blows bubbles) and on Interest.co.nz certainly captured attention with both media platforms receiving extensive comments from engaged readers.

The article proffers the opinion that the actions of the Reserve Bank back in 2003, in deciding to continually cut the Official Cash Rate from 5.75% to 5.0% and the hold it there despite the frothy economy was pivotal in driving the bubble in house prices seen to occur over the ensuing 4 years; during which time period as Bernard states “houses prices almost doubled”.

The fact is that the Stratified median house price in January 2003 was $203,550; just under 5 years later in November 2007 the market peaked with a price of $380,900 an 87% increase.

Bernard then goes on to state that the current activity by the Reserve Bank to hold the OCR at the current rate of 2.5% is “history repeating itself, or more colourfully put – deja vu all over again?” and given the recent rise in property sales, he goes on to forecasts that we are likely to see another property price bubble in the coming years.

To be clear Bernard is not saying that we will see an 87% increase in house prices over the next 5 years, he simply seeks to challenge the assumptions of the Reserve Bank and seek to highlight “worrying early signs” such as the latest report by Barfoot & Thompson for February and the BNZ – REINZ survey both citing “increasingly bubbly sounds” from the property market. The latest data from REINZ for February sales would seem to support this view.

This supposition deserves some deeper analysis of the underlying numbers (which are public data from REINZ) to bring some perspective to the discussion.

The chart below uses the REINZ / Reserve Bank Stratified median house price data and compares the prior 5 years to the start of 2003 against the most recent 5 year period as cited by Bernard, to see if the circumstances leading up to this sense of deja vu are really that similar.

The chart shows the 5 year period of 1998 to 2003 in the blue line with the left hand axis, tracked against the most recent 5 years of Stratified median house prices to February 2012 with the red line on the right hand axis. Matching these 2 separate 5 year periods provides a valid comparison allowing for the very different scales.

What is clear from the chart is that property prices in the run up to the decisions made by the Reserve Bank in 2003 were already on the rise; and had been for over 20 months. In fact based on the point 22 months back on the chart (April 2001) the stratified median house price was $176,775. From then on prices started to rise and by the zero month on the chart representing Feb 2003 they were already up by 17% before the actions of the Reserve Bank.

By comparison the recent 5 year period showed a turning point around 28 months ago (Oct 2009) when prices had been rising and leveled off, from that point in October 2009 right up until this month of February 2012 prices have risen by less than 1%. In fact the rise has been only $575.

The chart below shows the consequential impact as judged by Bernard as to the actions of the Reserve Bank through the 4 years following 2003.

Pretty striking – the question is, will the current market take off to such an extent? Based on the current data is looks less likely I would suggest.

There is no doubt that the heat in the NZ property market at this time is in Auckland and to analyse this region separately can add further insight to this discussion, therefore below is the paired charts for Auckland on the same perspective as the national charts above.

The interpretation I would make from this view of Auckland would be that the trend is mirroring the national perspective with a faster rate of increase, much as was seen in the 1998 to 2006 period. That would seem to support the view that we are likely to see some price increase in Auckland and across the country in the coming 5 years but not of the scale of the 2003 to 2007 period.

 

Fundamental Economics

In discussing the likelihood of a property price bubble it is critical not to ignore fundamental economics – the laws of supply and demand. On the supply side of the market there are currently constraints with a shortage of listings and inventory of property on the market below long term average as has been detailed in the NZ Property Reports through most of the second half of last year, however this is likely to ease as more listings are coming onto the market as cited by the rise through February. Sadly the parallel data for supply side for the period of 1998 to 2006 is not available. It is only with the advent of the web as the primary means of marketing real estate have we accessed to such data through realestate.co.nz.

On the demand side the rate of sales of property is the best surrogate and the chart below provides a compelling reason to believe that “things are different this time”!

The red line tracks the current 12 month moving average sales of properties over the past 5 years matched to sales of the 5 years leading up to 2003. This is very significant. Currently sales of properties are running at a rate of just over 61,000 per year whereas leading up to 2003 and the actions of the Reserve Bank at the time, they were running at over 100,000 a year, that is a difference of 63%.

The froth in the property market which catapulted the house price bubble from 2003 to 2007 was more likely to have been driven by the highly active demand from buyers anxious to “get onto the property money train” at that time, certainly influenced by low interest rates, but not solely the action in cutting OCR. Property sales had started ramping up well before 2003, in fact sales started to rise in 2001 and kept on rising to peak at over 120,000 per year in 2004.

At this time sales are rising – certainly not as fast nor at such a frothy level. That would seem to be a very compelling part of the picture to better understand the likelihood for another property price bubble – not that likely.

 

UPDATE (3.30pm 14th March)

This article has been published on interest.co.nz as an opinion piece to complement the original opinion piece by Bernard – for this I am very grateful.

A comment has just been posted by “Basil Brush III”

“How about adjusting those wonderful graphs for the relative inflation rates of each period. I would bet Alistair Helm cannot do that and make the same statement”

Well I love a challenge so for Basil Brush III here is the key chart adjusted for inflation over the period – looks to me like the argument is even stronger that we are not likely to see a bubble!

6

NZ Property Report – February 2012

Posted on: March 1st, 2012 | Filed in Featured, NZ Property Report

The February 2012 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of February. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – February 2012 is published below and is available for download (1.5MB) and distribution.

Summary of the market – February 2012

The property market across the country in aggregate has become more active in the past 9 months, in January alone sales were up 25% on a year ago and the final 3 months of 2011 saw sales up 22%. With this increasing demand the market as reflected from the supply side has been slow to respond, that is until February when listings were seen to come onto the market in a strong surge.

In absolute terms the level of new listings at 13,459 is up 18% on February last year and 14% up on a seasonally adjusted basis from January. This new rush of listings comes with a higher price expectation of sellers, eager to capitalize on what they see as a strong property market, the test will come as to whether these price expectations result in higher selling prices or if the level of buyer demand is prepared to meet these expectations. As has been noted before, this pressure in the market caused by a shortage of listing is very focused in the main cities with provincial regions still not witnessing anything like the level of buyer demand or activity as witnessed in the cities.

This new surge of listings appears in the main to be easing some of the pressure as measured by inventory levels with easing in those areas of the country feeling the shortage most significantly in recent months providing some comfort for those buyers who are eagerly waiting for the right house to come to market.

 

Asking Price

The seasonally adjusted truncated mean asking price of $426,575 for all new listings in February rose by 2.1% from January. This is a new record level for asking price up from the prior peak of $425,936 reached in October last year. The trend as seen in the chart covering the last 3 years shows a degree of accelerated growth in asking price over the recent 12 months as compared to 2010.

 

 

New Listings

The level of new listings coming onto the market in February rose sharply with a total of 13,459 new listings coming onto the market. This represents a seasonally adjusted rise of 13.5% from January and is up 18.1% as compared to February last year.

On a 12 month moving average basis a total of 127,054 new listings have come onto the market since March 2011 as compared to 133,883 in the prior 12 month period, a fall of 5.1%.

 

Inventory

The level of unsold houses on the market at the end of February (47,058) was up marginally as compared to January (46,976) as measured on a seasonally adjusted basis. This total includes houses, apartments and lifestyle properties on the market. However as a function of the increasing level of sales over the past 6 months, the inventory as measured in weeks of equivalent sales has fallen again from 36.4 weeks in January to 36.0 weeks in February. This compares to an inventory in February last year of 48.7 weeks, a fall of 26% in a year.

 

Regional Summary – Asking price expectations

The national (seasonally adjusted) truncated mean asking price expectation among sellers rose significantly to a new high of $426,575 in February.

Following the new record high for the national figure of asking price, both Canterbury and the Central North Island posted record highs. In the case of the Central North Island this is the highest asking price since October 2008, for Canterbury the pressure of listings shortages continues to put pressure on asking price.

Around the rest of the country 11 regions showed rises with Nelson the largest rise of 15.3% as compared to prior month on a seasonally adjusted basis. A total of 8 regions reported seasonally adjusted falls with the West Coast and Taranaki posting large falls of 8.4% and 7.3% respectively.

As has been seen in recent months the main three metro centers of Auckland, Wellington and Canterbury reported continuing rises in asking price.

 

Regional Summary – Listings

The general picture across the country for February was for a significant rise in new listings. Only one region, the Coromandel reported lower number of listings in February this year as compared to last year – down 19%. The remaining 18 regions reported rises of single digits right up to a massive 51% rise in Marlborough and 55% in Gisborne, with many regions reporting 30+% increases.

The tightest markets of the past 6 months being the major 3 cities saw some degree of pressure easing on limited supply as Canterbury saw a 31% rise with over 1,500 listings, however Auckland saw only a 16% rise and Wellington 10% rise. These increases do not match the year-on-year increase in sales which in January for Auckland was 28% and Wellington 18%.

 

Regional Summary – Inventory

The inventory of unsold homes on the market tightened again in February marginally slipping down to 36.0 weeks of equivalent sales from 36.4 weeks on a seasonally adjusted basis.

The change which has been witnessed over the past month has been to a more balanced market in many regions. As judged by the relative inventory to long term average, 7 regions are identified as being sellers markets with just 4 being buyers markets, leaving the remaining 8 as balanced markets favouring neither one party over the other.

The most extreme market pressure continues to be felt in the Canterbury and Auckland markets, but also in the Waikato and the West Coast, all of which are seeing levels of inventory when judged on rate of sale basis well below long term average. A noticeable change in February was the fact that in all 3 major cities the actual inventory level in weeks of equivalent sales and physical inventory did rise thereby showing that the market is responding the demand and shortage of supply.

 

Lifestyle

Lifestyle property listings rose sharply in February reflecting the general property market. A total of 1,048 listings came onto the market, up 12% year-on-year and up 65% as compared to January. The truncated mean asking price for these listings rose by 10% as compared to the recent 3 month average to $643,647 – a new record high in asking price, surpassing the last peak of Feb 2009 at $633,811.

Across the country, four regions also recorded new peak asking price – Waikato, Hawkes Bay, West Coast and Canterbury.

 

Apartments

Listings for apartments rose sharply in February with 538 being brought to the market, a rise of 88% as compared to January and 13% up on February last year. The truncated means asking price rose significantly from $349,736 in January to $402,278 in February, a 10% year-on-year increase and up 8% on the recent 3 month average.

The Auckland apartment market also witnessed a strong month with 329 new listings coming onto the market, up 84% from the very low level of January and up just 2% on February last year. The truncated mean asking price rose sharply to $390,021 from $314,757 in January representing a 20% year-on-year increase and a 14% increase on the prior 3 months.

 

Notes:

Truncated mean

The monthly asking price for new listings presented in this report utilises the measure of ‘truncated mean’. This measure is judged to be a more accurate measure of the market price than average price as it statistically removes the extremes that exist within any property market that can so easily introduce a skew to traditional average price figures.

The truncated mean used in this report removes the upper 10% and the lower 10% of listings in each data set. An average or mean of the balance of listings is then calculated.

 

Methodology

With the largest database of properties for sale in NZ from licensed real estate agents, realestate.co.nz is uniquely placed to immediately identify any changes in the marketplace. The realestate.co.nz NZ Property Report is compiled from new listings coming onto the market from the more than 1,000 licensed real estate offices across NZ, representing more than 95% of all offices.

With an average monthly level of over 10,000 new listings, the realestate.co.nz NZ Property Report provides the largest monthly sample report on the residential property market, as well as a more timely view of the property market than any other property report. The data is collated and analysed at the close of each month, and the Report is compiled for the 1st day of the following month. This provides a feedback mechanism as to the immediate state of the market, well in advance of sales statistics, which by the very nature of the selling process can reflect activity with a lag of between 2 and 4 months.

In analysing the details of the 13,459 new listings in the month of November, a total of 730 listings have been excluded due to anomalies. The land area of the property defines the categorisation of Lifestyle property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.

 

Seasonally adjustment

The core data for the NZ Property Report is seasonally adjusted to better represent the core underlying trend of the property market in NZ. In preparing this seasonally adjusted data Realestate.co.nz is grateful for the assistance of the New Zealand Institute of Economic Research (NZIER) who use an X12 ARIMA methodology to calculate seasonally adjusted data.

 

Background to Realestate.co.nz

Realestate.co.nz is the official website company of the real estate industry of New Zealand, it is an industry owned web business providing online marketing services to the real estate industry. The shareholders in the business comprise the REINZ (50%) and six of the largest real estate companies (50%).

The business operates a portfolio of websites all focused to specialist sectors of the real estate market:

Realestate.co.nz is the heart of the business and is focused to the residential property market. It features the most comprehensive selection of property for sale and rent across NZ. The website attracts a significant monthly audience of over 400,000 unique browsers, with over 110,000 of those visiting from countries outside of NZ.

nzFarms is a specialist website presenting the most comprehensive selection of farms and agricultural businesses on the market across NZ. At this time it features around 5,000 listings for all types of farms and agricultural land as well as over 11,000 lifestyle properties.

Prime Commercial is a specialist website presenting the most comprehensive selection of commercial property for purchase or lease on the market across NZ. At this time it features over 27,000 listings for all types of properties – retail, commercial, industrial and investment properties.

Prime Business is a specialist website presenting the most comprehensive selection of businesses for sale on the market across NZ. At this time it features over 4,300 listings for all types of businesses – retail, tourism, wholesale as well as franchise opportunities.

Zoodle is a specialist property information website providing very detailed data on all residential properties in NZ. The database comprises over 1.6m properties with detailed specifications, map and local amenities. The site provides online reports for free and for purchase covering valuation and legal information to greatly assist the needs of property buyers and sellers.

 

The web business of Realestate.co.nz site is the most comprehensive real estate web operation in NZ, currently hosting over 110,000 listings, covering this portfolio of residential property for sale and rent, commercial property for sale and lease, rural properties and farms, as well as businesses for sale. With a subscriber base of over 1,000 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for February 2012 can be downloaded here (1.5MB 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 under attribution to the source of the data being Realestate.co.nz. The next NZ Property Report for March 2012 will be published on this website on Sunday 1st April 2012 at 10am.

 

 

 

4

The property market’s tightness of new listings may soon be over

Posted on: February 19th, 2012 | Filed in Buying / Selling a home, Featured

The consistent message through the past 6 months for the supply side of the property market has been a shortage of listings. That shortage is likely to ease in the coming months.

This forecast is based on extensive analysis of the property market cycles of sales and new listings – the two key metrics which reflect the demand and supply side of the market.

The property market as with most markets moves in cycles. The recent 5 years has seen a significant re-adjustment, as the heady days of the early part of the last decade when property sales topped 120,000 in a year, have been replaced by the more sobering reality of a market seeing in the past 12 months sales of just 60,000 properties.

The property market as reported in the monthly NZ Property Report is very much influenced by the levers of supply and demand. Through the comprehensive data from the Realestate.co.nz website we have been able over the past 5 years to track the supply side of the market – the number of new listings that come onto the market each month. Matched to this, is the demand side which is reflected by the number of property sales per month as reported by the Real Estate Institute (REINZ).

Looking back over the past 5 years, in an average month around 11,500 new property listings come onto the market whilst around 5,200 properties sales are transacted on average per month. The balance of new listings either remain on the market thereby adding to the existing inventory as property takes longer to sell, or in the majority of cases properties are withdrawn to perhaps be relisted later.

Recent analysis we have undertaken shows that the cycles of property supply and demand does not follow in perfect alignment. The chart below has been developed by tracking the 12 month moving average of new listings and sales from the start of 2000 to the end of 2011 in the case of sales (blue line) and the past 5 years since 2006 in the case of listings (red line). It clearly shows the similarity of cycles, but equally shows a timing delay as the listing’s market lags the sales’ market.

(Note: the chart has different vertical axises – in the case of sales: 3,000 to 11,000; whereas for from 8,000 to 18,000. This presentation has been chosen to provide an alignment of the data points to better highlight the correlation between sales and listings)

Looking at this most recent 5 year period, the supply side cycle tends to lag the demand side cycle by around 6 months. That is to say that the actions of sellers seeking to list their property tends to lag the ups and downs of property sales. This is highlighted by the horizontal arrows tracking each of the peaks and troughs of this 5 year period.

This would infer that sellers judge their intent to list a house by a view of the level of recent sales – probably witnessed by “Sold” signs and media commentary. This lag is likely to explain why the market often gets over supplied even after sales have slowed; and as we have seen recently, sales are picking up whilst new listings remain low.

This current situation where property sales are rising faster than new listing is shown on this chart by the blue line intersecting and rising ahead of the red line of listings has occurred once before,albeit for a short time in 2009. That occurrence as a fall out from the global financial crisis lead to a significant build up of inventory as sales fell sharply through 2010.

So having undertaken this analysis I expect that the next question on everyone’s lips will be “Given that the analysis shows a correlation and a distinct cycle – what can this tell us about the expectations for 2012?”

The chart below takes a view based on some core assumptions as to how the next 12 months may look.

The first assumption is that the trend of property sales is likely to continue, albeit at a modest pace. In 2011 just over 60,000 properties were sold, for 2012 a 12% increase would see sales of 69,000 – a level that based on the historical long term average would not be too optimistic. With this slow rise in sales the likelihood is that the current rate of new listings will rise to a higher level as has been shown to happen in the past reflecting that 6 months lag effect. This extrapolation as shown in the chart would see around 142,000 new listings in 2012, up 15% from the 2011 all-time-low of 124,000.

 

 

 

0

Property sales on the rise, whilst listing still in decline

Posted on: February 7th, 2012 | Filed in Featured, Property Pulse - Regional Market Report

Through the last 2 quarters of 2011 the rate of property sales in NZ continued to grow; reaching a 22% year-on-year increase in the final quarter, whilst at the same time total new listings were down 1%.

This is the summary of the Quarterly Property Pulse complied from Realestate.co.nz listings data and REINZ sales data. The chart below details the year-on-year growth or decline for each 3 month period through the whole of 2010 and 2011.

Around the country the 19 regions show some degree of variations as summarised in the specific chart for each region.

1

NZ Property Report – January 2012

Posted on: February 1st, 2012 | Filed in Featured, NZ Property Report

The January 2012 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of January. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – January 2012 is published below and is available for download (1.5MB) and distribution.

Summary of the market – January 2012

The new calendar year starts with low levels of inventory of properties for sale on the market which is matched by a sluggish flow of new listings, which is then meeting a rising demand in the rate of sale which is up 22% for the past 3m months as compared to the same period last year. This scenario is most extreme in the 3 key regions of Auckland, Wellington and Canterbury which this rise in sales has driven the inventory levels to the lowest levels of the past 4 years – spanning a period when the property market has seen very lackluster activity.

Historically the supply side of the property market tends to lag the demand side as measured by sales and it is likely that the coming two months of February and March will see heightened activity in new listings as the property market hits the peak of activity over these summer months.

The data for this month’s report and going forward all future reports reflects the seasonally adjusted data for asking price expectation and inventory. The seasonal adjusted data better presents the true trends in these key metrics as it removes the inherent seasonality of the property market. The computation of this seasonally adjusted data is provided with the assistance of the New Zealand Institute of Economic Research (NZIER) and uses a X12 ARIMA methodology to calculate seasonally adjusted data.

Asking Price

The truncated mean asking price of $417,740 for all new listings in January now calculated on a seasonally adjusted basis fell 0.5% from December. The past 3 months has seen a progressive easing from the peak in October of $425,936 – an adjustment of 2%.

Despite this recent fall the long term trend is showing an increasing asking price albeit at a rate of just 1% per year.

 

New Listings

The level of new listings coming onto the market in January fell on a seasonally adjusted basis by a significant 12%. A total of 8,542 new listings came onto the market representing a very modest 3% year-on-year rise.

The continuing trend of the past 12 months is to a lower level of new listings – the past 12 months has seen just under 125,000 new listing as compared to 137,000 in the prior 12 month period.

 

Inventory

The level of unsold houses on the market at the end of January was up slightly as compared to December at 46,967 as measured on a seasonally adjusted basis. This total includes houses, apartments and lifestyle properties on the market. However as the rate of sale has picked up over the past 3 months leading up to the end of 2011, the inventory as measured in weeks of equivalent sales has fallen from 37.5 weeks in December to 36.4 weeks in January

 

Regional Summary – Asking price expectations

The national (seasonally adjusted) truncated mean asking price expectation among sellers eased again in January to $417,740.

Despite this national easing in asking price there were just 5 regions across the country that reported a fall in seasonally adjusted asking price. Most noticeable was the Central Otago/Queenstown Lakes and Nelson region which both showed double digit falls. Against this backdrop all of the price rises were of a smaller scale and reflect in the other 14 regions.

Auckland, the largest region of the country saw asking price fall by 1% to $540,187 – a consecutive 3 month fall since the peak of October 2011 at $560,327. Wellington asking price rose 2.9% to $444,900 and Canterbury up 0.6% to $374,123 – this latest asking price is fast approaching the peak of $374,952 last seen in January 2008.

 

Regional Summary – Listings

New listings movement across the country between December and January was in most regions fairly modest. There were 6 regions from the 19 that showed falls with Gisborne and the Wairarapa showing the biggest falls 21% and 20% respectively. Both of these regions have been experiencing high levels of inventory and this market reaction may well edge them back towards a more balanced market.

In contrast across the 13 regions that saw increases most saw modest single digit growths.

The Taranaki and Central Otago/ Queenstown Lakes both showed significant double digit growth in listings – the latter being a region which is beginning to see a buyers’ market emerging as inventory continues to rise.

 

Regional Summary – Inventory

The inventory of unsold homes on the market tightened again in January slipping down to 36 weeks of equivalent sales nationally. These figures now reflect seasonally adjusted data.

The majority of regions still favour sellers – 9 of the 19 are seen as sellers markets, with just 3 regions being categorized as buyers markets – Gisborne, Wairarapa and Central Otago/Queenstown Lakes .

The physical inventory of property on the market as measured on a seasonally adjusted basis is the lowest for the month of January since 2007 and as such represents a clear view of the tightness of the market. The market for the coming months will be very interesting to watch as transaction levels growing as the market hits the peak period of February and March.

 

Lifestyle

Lifestyle property listings in January at 634 listings was the second lowest month of the past 5 years – only marginally beaten by July of last year with 628. This level of new listings represented a 25% fall from December and a 13% fall from January last year. On a seasonally adjusted basis listings recorded a 34% decline from December.

The truncated mean asking price for lifestyle properties rose 13% in the month of January to $620,831 and represented a 15% year on year growth. Peak prices were seen in both Canterbury ($661,237) and the West Coast ($553,375).

 

Apartments

New listings for apartments fell to their lowest level in the past 5 years in January that despite a record low in December. Just 286 apartments coming onto the market, this reflected a 21% year on year fall. The truncated mean asking price of $349,736 was down 3% from January last year and 12% down on December.

The Auckland market which dominates the apartment market saw a record low level of new apartment listings with just 179 new listings in January which was down 9% on prior month and down 25% down on last year. The asking price was $314,757 which was down 8% on last year and 13% down from December.

 

Notes:

Truncated mean

The monthly asking price for new listings presented in this report utilises the measure of ‘truncated mean’. This measure is judged to be a more accurate measure of the market price than average price as it statistically removes the extremes that exist within any property market that can so easily introduce a skew to traditional average price figures.

The truncated mean used in this report removes the upper 10% and the lower 10% of listings in each data set. An average or mean of the balance of listings is then calculated.

Methodology

With the largest database of properties for sale in NZ, realestate.co.nz is uniquely placed to immediately identify any changes in the marketplace. The realestate.co.nz NZ Property Report is compiled from new listings coming onto the market from the more than 1,000 licensed real estate offices across NZ, representing more than 95% of all offices.

With an average monthly level of over 10,000 new listings, the realestate.co.nz NZ Property Report provides the largest monthly sample report on the residential property market, as well as a more timely view of the property market than any other property report. The data is collated and analysed at the close of each month, and the Report is compiled for the 1st day of the following month. This provides a feedback mechanism as to the immediate state of the market, well in advance of sales statistics, which by the very nature of the selling process can reflect activity with a lag of between 2 and 4 months.

In analysing the details of the 8,542 new listings in the month of November, a total of 292 listings have been excluded due to anomalies. The land area of the property defines the categorisation of Lifestyle property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.

Seasonally adjustment

The core data for the NZ Property Report is seasonally adjusted to better represent the core underlying trend of the property market in NZ. In preparing this seasonally adjusted data Realestate.co.nz is grateful for the assistance of the New Zealand Institute of Economic Research (NZIER) who use an X12 ARIMA methodology to calculate seasonally adjusted data.

 

Background to Realestate.co.nz

Realestate.co.nz is the official website company of the real estate industry of New Zealand, it is an industry owned web business providing online marketing services to the real estate industry. The shareholders in the business comprise the REINZ (50%) and six of the largest real estate companies (50%).

The business operates a portfolio of websites all focused to specialist sectors of the real estate market:

Realestate.co.nz is the heart of the business and is focused to the residential property market. It features the most comprehensive selection of property for sale and rent across NZ. The website attracts a significant monthly audience of over 400,000 unique browsers, with over 110,000 of those visiting from countries outside of NZ.

nzFarms is a specialist website presenting the most comprehensive selection of farms and agricultural businesses on the market across NZ. At this time it features around 5,000 listings for all types of farms and agricultural land as well as over 11,000 lifestyle properties.

Prime Commercial is a specialist website presenting the most comprehensive selection of commercial property for purchase or lease on the market across NZ. At this time it features over 27,000 listings for all types of properties – retail, commercial, industrial and investment properties.

Prime Business is a specialist website presenting the most comprehensive selection of businesses for sale on the market across NZ. At this time it features over 4,300 listings for all types of businesses – retail, tourism, wholesale as well as franchise opportunities.

Zoodle is a specialist property information website providing very detailed data on all residential properties in NZ. The database comprises over 1.6m properties with detailed specifications, map and local amenities. The site provides online reports for free and for purchase covering valuation and legal information to greatly assist the needs of property buyers and sellers.

The web business of Realestate.co.nz site is the most comprehensive real estate web operation in NZ, currently hosting over 110,000 listings, covering this portfolio of residential property for sale and rent, commercial property for sale and lease, rural properties and farms, as well as businesses for sale. With a subscriber base of over 1,000 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

 

The full NZ Property Report for January 2011 can be downloaded here (1.5MB 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 under attribution to the source of the data being Realestate.co.nz. The next NZ Property Report for February 2012 will be published on this website on Thursday1st March 2012 at 10am.

 

2

Property sales have clearly turned a corner

Posted on: January 26th, 2012 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

The property market in NZ starts 2012 in better shape than it has for the past 5 years. It would not be too optimistic to say that the industry, certainly in terms of volume sales has turned a corner. Some parts turned that corner 6 months ago (notably Auckland) whilst some will take a few more months before witnessing this change.

In the 12 months of 2011 a total of 61, 269 properties were sold across the country as reported by the Real Estate Institute. This represented a modest 9% growth as compared to 2010. The word modest is most appropriate when the volume of sales is viewed against the perspective of the past 20 years.

20011 was much improved from both 2008 and 2010 which represented the lowest sales volumes of the past 20 years, barely struggling to reach half the sales volumes of the peak years of 2002 to 2007.

 

As ever 20/20 hindsight is a powerful tool and applying it now applies a clearer view on those heady days and reflect that this period was a bubble – one unlikely to be repeated for many years, if ever again.

What drove that bubble and created that frenetic pace of market activity?

A number of factors were conspicuous: the rise in investor market activity as the NZ economy grew through global growth and strong immigration, the banks were certainly relaxed about deposit requirements and other investment options showed far less appeal or tax or leverage advantage. That convergence of events lead to a virtuous cycle (depending on your perspective as many would argue a fateful and perilous cycle), whereby those on the treadmill of property ownership felt richer as asset values as a surrogate of property prices grew at a heady 10+% a year rate.

The important thing to see is that if this heady period is ignored as an aberration, the current sales levels still sits well below the levels of the market through the 1990’s. This is the validation to the proposition that the industry has turned a corner. Average annual sales through 1993 to 2001 was 78,000 a year – that means the current year up 9% vs 2010 is still down 22% from the average of the 90’s.

This perspective is seen even clearer when property sales are matched to the growing population of NZ and the number of houses. It makes logical sense that as the population grows, the housing stock must grow and thereby so must sales as people always need to relocate for the logical need of jobs, lifestyle, financial, schools, family etc.

Over the period from 1993 to 2001 the number of houses in NZ grew from just under 1.2 million to 1.37 million and has continued to grow (even allowing for the depressed construction market of the last 4 years) to around 1.55 million today – that is around 350,000 more houses in NZ today than there were at the beginning of the 90’s. Yet the volume of property sales are 22% less!

This conundrum is best visualised in the chart below which tracks the % of property sales on a moving annual total basis against the total number of properties in NZ.

The chart provides a further validation to the belief that property sales are likely to see growth in the coming years. The current rate of sale is 4% of all properties sold per year. The long term average for the past 20 years is 6%, during the 90’s the rate was 6.2%.

If the rate of sale were to return to the 90’s levels we would see a 56% rise in sales to 95,000. If we only saw a rise to the lowest point of the 90’s at 4.7% we would still see a rise in sales of 73,000 a rise of 19%.

 

 

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NZ Property Report – December 2011

Posted on: January 1st, 2012 | Filed in Featured, NZ Property Report

The December 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of December. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

 

A full print version of the NZ Property Report – December 2011 is published below and is available for download (1.5MB) and distribution.

 

Summary of the market – December 2011

The property market saw a further tightening of supply in December, more especially in the 3 major cities where the market remains very firmly as a sellers market. In overall terms the number of new listings coming onto the market in December was considerably lower than expected given the surge in November. This lower level means that inventory levels of property on the market slipped again to remain below the long term average. In December with 47,557 properties on the market the current rate of sale would see these all sell in just over 36 weeks as against the long term average of 41 weeks. This national level has remained below the average for 6 months in a row and with strong sales in November and early December it is anticipated that this will continue into the new year.

The country overall is still balanced between a buyers and a sellers market with the provincial areas seeing less tightness in new listings and available inventory of property on the market.

 

Asking Price

The truncated mean asking price of $420,109 for all new listings in December eased slightly again from the peak in October of $434,161. On a seasonally adjusted basis the asking price actually rose 0.4%.

The long term trend as seen in the chart has been a steady increase in asking price over the past 3 years – the seasonal trend each year tends to see asking prices rise through from mid winter to October before falling back.

 

New Listings

The level of new listings coming onto the market in December fell on a seasonally adjusted basis by 2%. A total of 8,732 new listings came onto the market representing a 2% year-on-year fall.

For the calendar year of 2011 a total of 124,748 new listings came onto the market as compared to 138,789 for calendar year 2010 – a fall of 10%. By comparison the prior years stats were 2007: 177,529; 2008: 163,488; 2009: 135,416. So as compared to the peak of the market on 2007 listings are down 30%.

 

Inventory

The level of unsold houses on the market at the end of December slipped lower in somewhat of an unexpected trend. At the end of the month there were 47,557 houses, apartments and lifestyle properties on the market down from the 48,647 in November and down significantly from 53,077 a year ago. This current level of inventory represents 36.7 weeks of equivalent sales.

 

 

Regional Summary – Asking price expectations

The national truncated mean asking price expectation among sellers eased again in November to $420,109. This price trend has been seen for each of the past 4 years as rising asking prices begin to ease as the summer approaches.

Across the 19 regions the view is mixed with 10 regions showing an increase in asking prices as measured against the recent 3 month average. There were 4 regions showing significant rises n asking prices of over 5% – Central North Island, Nelson, Central Otago / Queenstown Lakes and West Coast.

Amongst the 9 regions showing a fall in asking price there were 6 regions where the falls were modest (between 1% and 5%) – Coromandel, Hawkes Bay, Wellington, Canterbury, Otago and Southland. The largest fall in asking price in the month was in the Wairarapa which saw asking price fall by 11% vs. December last year.

 

Regional Summary – Listings

New listings fell across most of the country in December with just 6 of the 19 regions seeing any increase on a year-on-year basis. The biggest falls was seen in the Wairarapa and the Coromandel which was down 26% with just 204 new listings, this follows a 29% year-on-year decline in November.

Contrasting these regions were the Central North Island reporting 35% increase, The other regions reporting increases all were below 20% increase indicating the low levels of new listings coming onto the market over recent months as compared to prior years.

The remainder of the country seems to reflect a balance with 3 regions reporting barely changed levels of new listings which would indicate a balance between buyers and sellers.

 

Regional Summary – Inventory

The inventory of unsold homes on the market eased slightly this month following a fall first seen last month. The expectations from October was to have seen some rise over the summer but with keen buying activity to the rise in new listings in November did not result in building inventory – quite the reverse.

Across the country there were a total of 9 regions where the advantage is to sellers. Of these the 7 regions of Auckland, Manawatu/Wanganui, Canterbury, West Coast, Central North Island and the Waikato remain very much in strong sellers markets.

There are however still 5 regions (Central Otago / Queenstown Lakes, Wairarapa, Southland, Taranaki and Gisborne) were the market is certainly favouring buyers with high levels of inventory set against long term average.

The market is now firmly in the peak summer season and with the more balanced market in terms of inventory of unsold properties on the market the options seem more open for both active buyers and sellers.

 

Lifestyle

Lifestyle property listings fell back in December with 845 listings in the month, this represented a 1.5% seasonally adjusted fall and was down 9% on the same month last year. The truncated mean asking price at $550,245 was up 2% from last year but down 8% down on the recent 3 month average.

Across the country strength in new listings was seen in Otago (33, up 120% Yr. on Yr.) and the West Coast (25, up 108% Yr. on Yr.). Whilst the Bay of Plenty, Hawkes Bay and Gisborne all saw year on year falls of over 30%.

 

Apartments

New listings for apartments fell to their lowest level in the past 4 years in December with just 346 apartments coming onto the market, this reflected a 35% from November and a 23% fall on last year. The truncated mean asking price of $396,501 was up 7% from prior month, but down 14% as compared to last year.

The Auckland market which dominates the apartment market saw a record low level of new apartment listings with just 196 new listings in December which was down 44% on prior month and down 27% down on last year. The asking price was $360,522 which was down 25% on last year but 2% up from November.

 

Notes:

Truncated mean

The monthly asking price for new listings presented in this report utilises the measure of ‘truncated mean’. This measure is judged to be a more accurate measure of the market price than average price as it statistically removes the extremes that exist within any property market that can so easily introduce a skew to traditional average price figures.

The truncated mean used in this report removes the upper 10% and the lower 10% of listings in each data set. An average or mean of the balance of listings is then calculated.

 

Methodology

With the largest database of properties for sale in NZ, realestate.co.nz is uniquely placed to immediately identify any changes in the marketplace. The realestate.co.nz NZ Property Report is compiled from new listings coming onto the market from the more than 1,000 licensed real estate offices across NZ, representing more than 95% of all offices.

With an average monthly level of over 10,000 new listings, the realestate.co.nz NZ Property Report provides the largest monthly sample report on the residential property market, as well as a more timely view of the property market than any other property report. The data is collated and analysed at the close of each month, and the Report is compiled for the 1st day of the following month. This provides a feedback mechanism as to the immediate state of the market, well in advance of sales statistics, which by the very nature of the selling process can reflect activity with a lag of between 2 and 4 months.

In analysing the details of the 8,732 new listings in the month of November, a total of 84 listings have been excluded due to anomalies. The land area of the property defines the categorisation of Lifestyle property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.

 

Background to Realestate.co.nz

Realestate.co.nz is the official website company of the real estate industry of New Zealand, it is an industry owned web business providing online marketing services to the real estate industry. The shareholders in the business comprise the REINZ (50%) and six of the largest real estate companies (50%).

The business operates a portfolio of websites all focused to specialist sectors of the real estate market:

Realestate.co.nz is the heart of the business and is focused to the residential property market. It features the most comprehensive selection of property for sale and rent across NZ. The website attracts a significant monthly audience of over 400,000 unique browsers, with over 110,000 of those visiting from countries outside of NZ.

nzFarms is a specialist website presenting the most comprehensive selection of farms and agricultural businesses on the market across NZ. At this time it features around 5,000 listings for all types of farms and agricultural land as well as over 11,000 lifestyle properties.

Prime Commercial is a specialist website presenting the most comprehensive selection of commercial property for purchase or lease on the market across NZ. At this time it features over 27,000 listings for all types of properties – retail, commercial, industrial and investment properties.

Prime Business is a specialist website presenting the most comprehensive selection of businesses for sale on the market across NZ. At this time it features over 4,300 listings for all types of businesses – retail, tourism, wholesale as well as franchise opportunities.

Zoodle is a specialist property information website providing very detailed data on all residential properties in NZ. The database comprises over 1.6m properties with detailed specifications, map and local amenities. The site provides online reports for free and for purchase covering valuation and legal information to greatly assist the needs of property buyers and sellers.

The web business of Realestate.co.nz site is the most comprehensive real estate web operation in NZ, currently hosting over 110,000 listings, covering this portfolio of residential property for sale and rent, commercial property for sale and lease, rural properties and farms, as well as businesses for sale. With a subscriber base of over 1,000 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

 

The full NZ Property Report for December 2011 can be downloaded here (1.5MB 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 under attribution to the source of the data being Realestate.co.nz. The next NZ Property Report for January 2012 will be published on this website on Wednesday 1st February 2012 at 10am.

1

Auctions provide a bellwether for the the property market (Updated)

Posted on: December 22nd, 2011 | Filed in Buying / Selling a home, Featured

This article has been updated to reflect the further development of the market through to March 2012.

The state of the property market can be assessed by keeping a close eye on the number of properties being marketed for Auction. When you spot more and more of the For Sale street signs emblazened with “Auction” you can safely bet that the property market is heating up.

This view is certainly articulated in the article today titled “Auckland house auctions hit high“. Based on sales data supplied by the Real Estate Institute (REINZ) the number of properties sold in November across the country as Auctions was the highest ever at more than 25%. Looking specifically at the Auckland market Barfoot & Thompson November reported that around 40% of it’s current listings are being for sale by auction.

These reported statistics got me interested as we have in the past reported on the number of listings coming onto the market and specifically on the market across our comprehensive database. Back in August we reported that Auctions across the whole country had risen to a peak in June as representing 13% of all new listings, in Auckland that figure was even higher with over 20% of all new listings being for Auction properties for sale. These figures though are lower than the respective REINZ or Barfoot & Thompson figures.

Looking at the latest data for the month of November we saw 1,206 new listings of Auctions of properties come onto the market across NZ, this represented 9% of all new listings. In Auckland the number was 790 which represented over 17% – a new record, so the data is consistent.

In tracking the data over the past 4 years what is very interesting is that Auctions as a form of marketing rises as available inventory falls (as it does when the market picks up) and similarly falls as inventory rises. This is represented in the chart below, tracking new listings of Auctions per month as a % of all listings (blue bars) against the available stock on the market as measured as equivalent weeks sales as we track for the NZ Property Report.

In Auckland the same trend is evident, and more pronounced.

So it is clear that Auction marketing is a bellwether of the state of the market, which is not that surprising as vendors are more keen to pitch their property to a more active market when there is more demand from active buyers and see the open auction environment ensure that transparency works for them to maximise property demand lead pricing.

Updated

The first 3 months of 2012 has seen further significant growth in property sales matched to  further tightening in the property market as new listings have failed to keep pace with the growing demand – the latest NZ Property Report provides detailed analysis of this. A consequence of this is that auctions have further increased as a chosen route to selling a home.

As cited above record levels of new listings coming onto the market as auctions were witnessed pre-Christmas, those record levels have been exceeded in the past few months. March reached a new high with 13% of all property listings across the country being auctions and in Auckland a record 24% of all new listings being auctions.

Auckland though is not alone, the chart below shows the comparison across the 19 regions of the country between March 2011 and March 2012 or auction listings as representative of all new listings. Almost all regions saw a massive increase in representation of auctions within the new listings with the Central North Island and Gisborne sharing the Auckland record representation with nearly a quarter of all new listings as auctions.

 

Point of Note

The realestate.co.nz website has a very useful feature which allows you search by pricing type (Auction / Negotiation / Tender / POA / Offers / Display Price). As at this time there are 1,875 properties being marketed on the website as Auctions,  406 properties being marketed on the website as Tenders, and  36,906 properties being marketed with a price on the website 

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Property Pulse – November 2011

Posted on: December 20th, 2011 | Filed in Featured, Property Pulse - Regional Market Report

Each month we publish a factsheet for each region of the country as well as a national report to provide an insight to the key numbers that detail the health of the property market across the country.

These reports for the month of November cover all 16 provincial regions as well as reports covering the 3 main metropolitan regions of Auckland, Wellington and Christchurch. The Auckland report is divided up into each of the main metro areas (North Shore, Waitakere, Manukau as well as Auckland City).

Each factsheet provides the key numbers in table and chart form using the key statistics from the Real Estate Institute of NZ and Realestate.co.nz. This provides the number of property sales in the month, the median sales price for those property sales, the inventory of unsold properties on the market, as well as the number and the asking price expectation of new listings brought onto the market in the month.

Metropolitan Areas

Auckland City

North Shore

Waitakere

Manukau

Wellington

Chistchurch

Provincial Areas

Northland

Coromandel

Waikato

Bay of Plenty

Central North Island

Hawkes Bay

Gisborne

Taranaki

Manawatu / Wanganui

Wairarapa

Nelson

Marlborough

West Coast

Otago

Queenstown Lakes

Southland

National Property Pulse

The national NZ property pulse factsheet for November 2011 is published using data from Realestate.co.nz and REINZ (Real Estate Institute of NZ).

Property sales across the country totalled 6,008 in the month showed a strong rise on a seasonally adjusted basis in November and a significant 17% rise as compared to November 2010. The inventory of unsold houses on the market at 38 weeks of equivalent sales continues to sit below the long-term average of 41 weeks indicating that the market in overall terms is favouring sellers, although this bias is primarily being seen in the metro areas of Auckland and Christchurch.

The stratified mean sales price for property sales across the country at $372,225 is up 3% as compared to a year ago, and continues to show a steady rise over the past year and is now at a 3 year high. The asking price expectation of new listings slipped slightly from the peak seen in October; for the month of November the asking price was $425,956, which is 2% up as compared to a year ago.

The level of new listings coming onto the market in November at 13,369 showed a significant rise from October and is 3% up on a year ago.

 

 

1

Mobile usage for finding property reaches a new milestone

Posted on: December 14th, 2011 | Filed in Featured, International, mobile

All of us here at Realestate.co.nz are delighted to see the mobile apps for both iPhone and Android blast through the 50,000 download mark this week.

It was just over a year ago when we launched the iPhone app – the first in NZ and the only app with GPS location based property search. A year later and we continue to be surprised and delighted by the uptake and usage which now approaches 14% of all visitor traffic to our listings from the mobile platform.

The appeal of this method of property discovery has been turbocharged in the past couple of months as the summer peak property season has arrived. The month of October saw the highest ever level of downloads with over 6,000 in the month, greatly assisted by the new Android version of the app (another first) in late September. The level of downloads continues with over 200 new downloads per day providing the users with the experience of discovering the convenience and addictive appeal of this app.

Not only are people downloading the app in ever increasing numbers but they are engaging with it more often. Over 2,000 visitors a day check out property for sale and rent whilst on the go – at the cafe, in front of the TV, at open homes.

The app is so comprehensive and so appealing. With the largest selection of listings by licensed agents, usage appeals to the serious property hunter keen to be better informed and in control of the property searching process. Over 90% of users are returning users and unlike the web which is very heavily focused to casual image based browsing the mobile app is all about property information and insight in the palm of your hand.

We have been interested to see just how keen kiwi’s are relative to other countries in regard to uptake and usage of property apps on the the smartphone. Instead of comparing downloads by country (which is tricky as not many other websites publish their data) we chose to use the ranking of the various apps in their respective iTunes app store. Clearly this just seeks to identify the iPhone platform, but this has been the consistent largest platform across all international markets for property apps.

We chose six countries to compare against NZ from Australia and the US / Canada as well as Europe. What we found was very interesting. The Realestate.co.nz property app is the 16th most popular free lifestyle app in NZ, and the 209th most popular free app. Out of interest if you exclude the free “gaming” apps from the rankings the Realestate.co.nz property app jumps up to be the 41st most popular free iPhone app in NZ.

By comparison to NZ; Sweden appears to have the most popular iPhone property app from Hemnet coming in as the 8th most popular free lifestyle app in Sweden, and the 104th most popular free app overall.

Next comes Australia where the Realestate.com.au app comes in as the 11th most popular free lifestyle app and the 127th most popular free app. That then places NZ in third slot amongst these 7 countries. Next comes Canada almost equal to NZ with their Realtor app ranked as the 16th most popular free lifestyle apps and 239th place overall for free apps in Canada. After these four come the the French app from Seloger, the US app from Zillow, and the UK app from Rightmove.

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