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Archive for the ‘Featured’ Category

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NZ Property Market Pulse – October 2010

Posted on: October 21st, 2010 | Filed in Featured, Property Pulse - Regional Market Report

Property Pulse Realestate.co.nzThe Property Market Pulse report provides a set of factsheets for each of the 19 regions of the country consolidating the latest data from key sources in the real restate market. From the Real Estate Institute (REINZ) comes the latest sales numbers for September as well as the median sales price for key regions and the stratified sales price for key centers. From the Realestate.co.nz comprehensive database of listings comes the key measure of inventory of unsold properties on the market.

Property Sales

The number of property sales is a key measure of buyer activity. The Real Estate Institute release this data on a monthly basis from the sales made by all licensed agents in the prior month making this data the most timely and comprehensive. Actual monthly sales data is effected by seasonal factors, for this reason seasonally adjusted data is presented which clearly shows one month to the next if the sales are going up or down.

NZ property sales - october 2010

Commentary:

Sales in September totaled 4,323. On a seasonally adjusted basis as presented in the chart above the sales were up just 0.6% on August. As compared to September 2009 this month’s sales represent a fall of 33%. The level of sales in the calendar year to date reflect closely the sales levels of 2008 rather than 2009. In the first 9 months of 2008 sales totaled 43,131; in 2009 they totaled 52,394 and in this current year the total is 42,630.

As is highlighted in the regional reports the impact of the Canterbury earthquake significantly impacted not just that region but the national numbers. The Canterbury sales impact probably amounted to around a 5% decline on a national basis as the region itself suffered a close to 40% decline.

Property Price

The selling price of properties measures that critical balance between what a buyer is prepared to pay and what a seller is prepared to accept. The Real Estate Institute data of prior month sales produces a median price. This raw number is then re-calculated through a model developed in partnership with the Reserve Bank of NZ to create a Stratified Price, which ensures that volume changes in key price segments do not skew the figures.

NZ Stratified house price - Sep 2010

Commentary:

The stratified price fell in September at $359,555 reflects a marginal change on August when the price level was $360,675. The level of sales price using this accurate stratified method has been without any great volatility for the majority of this year after recovering from the market lows of 2009. At this current level it represents a 5.6% fall from the peak of the market back in November 2007.

Stock of Property

The number of properties on the month is provided from Realestate.co.nz data and measures the level of seller activity in the market. The data represents the total number of new listings coming onto the market each month and is compiled at the start of each month for the prior month and is published in the NZ Property Report. The measure of properties on the market is represented by the number of weeks of equivalent sales, and judged on a comparative basis with prior months more accurately reflects the state of the market.

NZ Inventory - Sep 2010

Commentary:

The level of inventory of properties on the market measured in equivalent weeks of sale picked up slightly in September. It now stands at 47 weeks as compared to 46 weeks in August and compares to 32 weeks in September last year. The long term average is around 38 weeks which would indicate that the market is still very much in favour of buyers rather than sellers.

These statistics are the aggregation of all the statistics from across the country. As is well know by those in the industry, real estate is a local business and in an attempt to provide greater insight into the local market the same set of key data – sales, selling price and inventory has been calculated for each of the 19 regions of the country. Check out the factsheet for your local region to see what is happening in your neck of the woods.

North Island

Northland

Auckland

Coromandel

Waikato

Central North Island

Bay of Plenty

Gisborne

Hawkes Bay

Taranaki

Manawatu / Wanganui

Wairarapa

Wellington

South Island

Nelson

Marlborough

Canterbury

West Coast

Otago

Queenstown Lakes

Southland

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21 years and the internet comes of age

Posted on: October 18th, 2010 | Filed in Featured, social media, Technology

Computer mind explosion1989 – just 21 years ago. How different things were then. I was not living in NZ at the time so I was not here to witness the birth of the internet which is being so beautifully documented this month by the Wellington digital agency Heyday.

They have created an online visual calendar of the past 21 years of the internet’s birth, adolescence and maturity with a single day spanning a year. They are calling it “Down to the Wire“. Started on Monday 11th October and due to conclude on Monday the 1st November. The project is a comprehensive visual history of the internet. I commend them for their execution which has become addictive daily viewing.

1989_ The Story of New Zealand_s InternetAnother compelling piece of viewing has been the superb BBC documentary series “Virtual Revolution” which has been aired on Sky’s Living Channel for the past 4 Sunday nights. This is a series of unprecedented richness and insight into the impact the web has had on our lives over the past two decades. I was somewhat surprised to see it air on Sky as opposed to TVNZ – a sad reflection of the output of formula-driven, mass-market, mind-numbingly repetitive crime dramas that seem to proliferate the TV screen these days. This is in the classic form – a great documentary.

The series is energetically presented by Aleks Krotoski who has had the opportunity to interview some of the great luminaries of the technical world – Bill Gates, Mark Zuckerberg, Jeff Bezos, Al Gore (the man who claims to have invented the internet – as opposed to the person who did invent the web – Tim Berners Lee, Steve Wozniak, Eric Schmit as well as a host of other key people – the only conspicuously missing individuals would be Larry Page & Sergey Brin and of course Steve Jobs.

If you have missed watching the series I recommend you at the very least watch some of the online videos on the website and hope some time soon another channel broadcasts it or see if you can download it on iTunes. It is incredibly good, not so much as a chronological history of 20 years of the web but more as a forward looking discussion of the impact that this digital revolution has had and will continue to have on our daily lives.

I reflect on the past 20 years and consider myself fortunate to have been a witness to this period of history and further to have had the opportunity to have participated in some of these technological advancements. I have to confess to being defined by sociologists as a late baby boomer (although someone very kindly called me the oldest Gen Y’er), and as such am judged to be a digital immigrant, despite this tagging I am passionate about what the future holds through yet further technological advancements; the scope of which we may not yet have even conceived.

Indulge me if you will, to allow me to share some of my personal highlights of the early years of the web!

  • I first came across the principle of the web in 1989 when I was in France on business and discovered Minitel – a private web which allowed Parisians the ability to order stuff through a modem connected terminal in home.
  • I first used email in 1994 with communication between London and LA during my time working for a movie company. I felt trepidation in sending an email direct to a studio exec, somehow I judged in those days that a fax message was in someways less intrusive than a message flashing up on a PC screen.
  • I first discovered the web through a hideous website for Village Cinemas in 1995 through a Netscape browser – I recall the experience of blue and red font on a black screen as being really straining on the eyes!
  • I logged onto the web for the first time from my first home computer in 1996 – I recall unpacking that Xtra box allowing me to connect up to my then new PC Direct PC to the web and establish my own personal email address.
  • In 1999 I managed the design and build (or to be correct had built for me by the amazing guys at Webmasters) my first website – www.mode.co.nz (sorry no longer there!) – it was a site to compliment the specialised service of new home building of masonary constructed houses that I was involved with at the time, as part of Fletcher Building.
  • In 2000 I undertook a study tour of the US with a team from Fletcher Building to investigate e-Business (this was the term of the day then). We visited some great companies (Cisco / GE / GM) and some great dotcom hopefuls (Ariba / Buildnet / Webvan). The latter company – Webvan was my favourite – delivering home grocery shopping via the web. It was probably the most expensive dotcom crash ever taking over US$1,000,0000,000 of investors money with it as it crashed, a very small piece of which was my own money!
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September 2010 Property market video – Realestate.co.nz

Posted on: October 15th, 2010 | Filed in Buying / Selling a home, Featured, Market News, REINZ Monthly data

Video image header for blogThe latest statistics from the Real Estate Institute for September, providing insight into the residential property market are presented in this video.

The key charts to accompany the video are provided below:

The sales analysis of the 3 key metro areas highlights the impact of the Canterbury earthquake on sales in the region. The flat property sales market in Wellington is contrasted with a rise in sales in Auckland of 12%. The sales figures are seasonally adjusted to allow comparable month by month comparisons.

Key_regions_sales_Sep_2010

The Stratified price for the total of NZ shows the extent to which prices have continued to slide over the past year since November last year when they had recovered some of the early falls after the peak in mid 2007. The current stratified price across the country is $359,555.

NZ_Strat_price_Sep_2010

The Auckland property prices have risen sharply in September to $487,800 to edge closer to that long term peak of July 2007, currently that differential is 4.4%.

Auckland_Strat_price_Sep_2010

The Wellington property prices continue to see some weakness with the stratified price down in the month to $403,595 which is 4.3% below the peak of the market just under a year ago.

Wellington_Strat_price_Sep_2010

The Christchurch stratified property price continued to show weakness. It is likely that the impact of the recent earthquake and the resultant fall in sales could impact reported prices and the state of the market. For the month of September the stratified price was $330,750. This level represents a level 6.7% below the peak of the property market in the city back in October 2007.

Christchurch_strat_price_Sep_2010

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Canterbury market continues to feel the after effects of earthquake

Posted on: October 14th, 2010 | Filed in Featured, Regional News, REINZ Monthly data, Website searching

REINZ monthly article headerThe latest sales results released today by the Real Estate Institute bear witness to the fact that the real estate market across the Canterbury region is struggling. A total of 359 properties were sold in September down from the 884 sold in the same month last year and also down from the 647 in September 2008 – up until August, the 2010 year was tracking pretty close to the same levels as 2008 as seen from the chart below.

Canterbury sales data for Sep 2010

The results for the Canterbury region are not unexpected given the catastrophic impact that the earthquake had on the built environment, not just in terms of actual structural damage, but more importantly in verification of structural integrity. The early signs of the impact of the earthquake were seen in terms of website visitors as seen in the days after the impact. That situation was showing signs of improving. However as can be seen from the chart below now that four weeks have passed the overall level of visitor traffic is down around 23% from where it would have been expected to be at this time of the year.

Canterbury region website visitor stats 2009 and 2010

The other early sign of the impact of the earthquake on the region was reported within the monthly NZ Property Report which was published on the 1st October and covered the month of September in terms of new listings. In September a total 1,211 new properties were listed in the Canterbury region which was down 19% on a seasonally adjusted basis from August. This compared to a total for all other regions of the country excluding Canterbury showing a small 1% increase from August on a seasonally adjusted basis.

Half way through October the picture is looking very similar with new listings still down, this is best shown from the chart below which tracks the % representation of the Canterbury region listings each month. The October data is for the first 14 days of the month so far.

Canterbury listings to oct 2010

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NZ Property Report – September 2010

Posted on: October 1st, 2010 | Filed in Featured, NZ Property Report

The New Zeland monthly Property Report from Realestate.co.nzThe September 2010 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 September. 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.

The September 2010 report tracks a key month as the market heads into spring. Whilst the level of new listings is up, the extent of the rise does not reflect a buoyant enthusiasm by sellers. Equally whilst the volumes may not be massive the expectation of asking price is holding firm, up slightly on the prior month and short term average. The key determinant of the market though remains the levels of unsold houses which at 11 months is high.

Realestate_DownloadNowA full print version of the NZ Property Report – September 2010 is published below and is available for download (1.1MB) and distribution.

Summary of the market – September 2010

Cover page Oct reportThe much anticipated spring surge in new listings appears to have failed to eventuate with the number rising by just 1% on a seasonally adjusted basis from August. The September total of 10,559 new listings is down by 17% as compared to Sep 2009 (12,674) and down 12% as compared to Sep 2008 (11,966).

The Canterbury earthquake did impact the new listings for September. However it was not as significantly as might have been anticipated. The total of 1,211 new listings added in the month across the region was down 26% on the August total of 1,354; but making adjustments for seasonality and evaluating the rest of the country performance on new listings it would appear that the impact is of the order of 20% less listings across the Canterbury region than would have been expected; this would amounting to around 290 listings coming onto the market.

The continued pressure in the market remains the high level of inventory of unsold houses; this rose again in September to 47.5 weeks despite the significant lower absolute level of new listings. Inventory levels as measured in terms of equivalent weeks of sales are up 48% year-on-year and a long way adrift from the long term average of 39 weeks.

The asking price expectation across the country crept up slightly allowing for the seasonal rise which is evident at this time of year as properties are listed to meet the seasonal activity. This 1% rise on a seasonally adjusted basis would seem to signal a confidence amongst sellers, that buyers who have for so long been sitting on the sidelines will become more active.

Asking Price

Asking_price_chart_Sep_2010The asking price expectation of new listings increased again in September up to $411,745 from $403,423 in August. This represents a 2% fall as compared to September last year. Against recent 3 month period the price represented a 2% increase.

The current asking price still lags 4% behind the peak of the market – some 35 months ago now in October 2007.

New Listings

New_listings_chart_Sep_2010The volume of new listings rose between August and September as is expected at this time of year. However the levels failed to spark a recovery to levels seen in prior years at this time.

The trend reflects what has been a subdued year in listings with just 105,022 in the 9 months of the year. This is not significantly above the 2009 total for the same period of 97,660. By comparison over the first 9 months of 2008 126,275 new listings came onto the market.

Inventory

Inventory_chart_Sep_2010The level of unsold houses on the market at the end of September totaled 51,035 up 2% from August. This represented the equivalent of 47.5 weeks, as assessed on a seasonally adjusted basis.

The continued subdued level of sales is holding inventory at such high levels despite this slower level of new listings, thereby adding to pressure on the market.

Regional Summary – Asking price expectations

Asking_price_map_Sep_2010The national asking price expectation showed a 1.8% increase as compared to the recent 3 month average. However underlying this national picture is a wide variation of price movements.

There were more regions showing increases this month (13) than falls (6). The largest rise was in Otago which at $293,362 recorded an all time high in asking price surpassing the prior peak in October 2007. Other large rises were seen in Central North Island, Manawatu and Gisborne although these were far from peak prices.

On the declining side there were some large falls seen in the Coromandel, Hawkes Bay and largest of all at 14% decline in the Queenstown Lakes region. This latter region does see significant volatility with a peak in July 2007 of $668,973 and a low of $479,699 in February 2009. The current level of $536,592 is therefore more reflective of a midpoint.

Regional Summary – Listings

New_listings_map_Sep_2010The predominant colour of the regional map for September would indicate that the future prospects for the property market could lead to a seller’s market. The level of new listings is significantly below last year in all but one region – Southland.

This significant decline in new listings, with fully half of all regions showing greater than 20% year-on-year decline is however being balanced off with lower year-on-year sales and this is where the telling indicator of inventory levels shows a true picture of the market.

Allowing for the specific issues experienced in Canterbury the listings in the two other main metro areas saw less extreme falls in new listings coming onto the market.

Regional Summary – Inventory

Inventory_map_Sep_2010With a national level of 47.5 weeks the regional perspective of inventory of unsold homes remains well above long term average with just 2 regions (Gisborne and West Coast) dipping below long term average.

At the extreme, the Coromandel region would have to take the award. The current stock of property on the market totals 2,002 listings. Set against this stock is a sales volume in August of 18, following a July total of 19 property sales. These extraordinary sales levels mean that the current inventory represents 289 weeks of sales – or over five and a half years.

The Nelson region which has been seeing some shift to a seller’s market in prior months has fallen back as inventory has grown to 32 weeks up from the long term average of 28 weeks.

The main metro regions of Auckland and Wellington whilst not in extreme levels of inventory both show a reasonable level of inventory above the long term average.

Lifestyle Property

Lifestyle_chart_Sep_2010Lifestyle properties certainly picked up in September with 980 new listings. This was up from 840 in August, although as compared to last year the seasonal increase is not as significant. On a rolling 12 month basis lifestyle property listings are up 7.4% with 12,322 listed in the past 12 months.

The asking price expectation of these new listings was $527,170 which was on all comparative metrics was significantly lower. As against the recent 3 month period it was down 5.1%, against September 2009 down 12% and down 5% compared to August 2010.

Apartments

Apartment_chart_Sep_2010There was no appreciable seasonal lift in apartments coming onto the market in September. A total of 506 new apartment listings were added in the month. This was down 2% from the prior month and down 16% on the same month a year ago. The relative perspective for the Auckland market was 345 new listings, down just 1% year-on-year.

The asking price expectation was fairly firm with a truncated mean of $362,427 which is 0.4% up on the recent 3 month period, but down 13.4% on the same month last year. Auckland apartments equally showed recent stability off just 0.5% as against recent 3 months and down 12.6% as against September 2009.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison, however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Index comparisonRealestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 94% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ: data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

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 1,130 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 10,559 new listings in the month of July, a total of 177 listings have been excluded due to anomalies. The categorisation of Lifestyle property is defined by the land area of the 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 1.5m 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 118,000 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 1,130 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for September 2010 can be downloaded here (1.1MB 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 October 2010 will be published on this website on Monday 1st November 2010 at 10am.

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Putting your house on the market this spring? – 5 key tips

Posted on: September 27th, 2010 | Filed in Agent Tips, Buying / Selling a home, Featured

For sale signOver the next 3 months we are likely to see over 35,000 new property listings hit the market. Over the same period the likely number of sales will be around 15,000. That would assume that there is roughly a 50/50 chance of selling your house this spring, that would be right if it were not for the fact that today there is over 56,000 properties on the market. Now you can see the challenge – how to ensure that your house gets bought and becomes one of those sales stats and allows you to move on – as opposed to being part of the high inventory of unsold homes.

Success in real estate in today’s world relied far more on the web. Research from just a couple of months ago reaffirmed this fact.

We decided that we should provide some useful advice around helping sellers get the most out of online marketing and took the opportunity to quiz a leading global expert. Simon Baker was CEO of Realestate.com.au for most of the last 10 years and in that time built it into the leading Australian real estate website. In this video interview I ask him to share his thoughts  as to the best way to market your home.

Simon sums up the tasks in 5 easy tips:

  1. Check out your prospective agent online – do they understand online marketing? – how do they present themselves and their clients listings online? – how effective and efficient are they at responding to enquiries online?
  2. Make sure your listings are featured on a wide range of websites – every website should be available to all agents
  3. Make sure the online presentation is high quality with comprehensive information
  4. Standout from the crowd – take advantage to give yourself and your property an advantage – use premium listing adverts, they are incredibly cost effective
  5. Keep a close with your agent to web performance – viewing, enquiries, responses

Good luck with selling your home this spring – but don’t leave it to luck – give yourself the upper hand!

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Financial pressures still evident as mortgagee listings rise

Posted on: September 25th, 2010 | Filed in Featured, Money Matters

Financial pressureThe latest data of mortgagee sales released last week by Terralink International showed a significant slow down after what has been almost 30 months of unbroken increases month-on-month.

In June a total of 202 transactions were registered as being made by the mortgagor seeking to recover the loan from the mortgagee who had become delinquent on the repayments. (There is no specific details as to the make up of these 202 transactions, ie. how many were of investment properties / developments as opposed to family homes). This total was down from the 289 reported in June 2009 and 24% down on a seasonally adjusted basis from the prior month. The monthly sales chart is shown below:

Mortgagee sales to June 2010

This clear sign of decline may however be a brief rest-bite. The tracking of mortgagee listings which are featured on realestate.co.nz have for a considerable period of time been in decline, however the trend over the past 4 months has shown a U-turn with a steady increase in the number of properties coming onto the market being marketed as mortgagee sales. The total had fallen to just 250 in late May and has risen slowly over the past months to now total 321 as at today.

The chart below tracks the inventory of properties being marketed as mortgagee sales for the past 3 years. It specifically highlights the peak of mortgagee property listings in mid 2008 and subsequent decline and then in the exploded view the rise of recent months.

Mortgagee listings Sep 2010

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Real estate marketing – practical online advice

Posted on: September 20th, 2010 | Filed in Agent Tips, Featured, Online marketing, social media, Website searching

iStock_000000504669XSmallThe recent “Future of Real Estate” conference held in Auckland provided us with the opportunity of sitting down with the keynote speakers and interviewing them to provide some global perspective to the opportunity emerging in online marketing.

Blogging

Joel Burslem is a highly regarded consultant with a background in online real estate marketing which has included stints at Inman News, Prudential as well as 1000 Watt Consulting where he currently works. In this interview I seek to better understand Joel’s perspective, advice and insight into blogging from the standpoint of a real estate agent.

Search Marketing

No successful business these days can ignore the importance of search marketing and search engine optimisation. For real estate this is ever more important as the future of lead generation for agents will likely come from online referrals and evaluations. To achieve standout requires a deep appreciation and understanding of search. For the conference we invited Charles Coxhead to speak on this key topic. Charles has an extensive experience in this area and in this interview I speak to Charles and get him to share some of the critical issues and advice around this subject.

Online Marketing

With such an excellent line up of speakers, we grabbed the opportunity to have a panel discussion with Joel Burslem, Charles Coxhead and Simon Baker. This free flowing discussion starts off looking at the dynamic shift in real estate advertising from print to online as witnessed around the world. It then goes on to talk about the priorities for real estate companies, offices and agents in their online presence and marketing, covering the tools of Facebook and Google Adwords, amongst other things.

We split the session into 2 videos covering the 20 minute discussion:

Part 2

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Property price trends warrant some deeper investigation

Posted on: September 17th, 2010 | Filed in Buying / Selling a home, Featured, Money Matters, REINZ Monthly data

REINZ monthly article headerThe latest data for August from the Real Estate Institute showed a continued sluggish market. Sales volumes are tracking at a very similar level to 2008. The month of August 2008 saw 4,220 property sales, whilst August 2010 saw 4,287. Taking the total for the current year to date (Jan – Aug), total sales this year are only 20 more properties than compared to 2008 (current year-to-date 38,542 compared to 2008 at 38,522). The summary of the monthly sales over the past 4 years is shown below with the 3 winter months of June, July and August highlighted in red.

REINZ_sales_vol_2007_to_2010

One of the consequences of a slower property sales is the fact that sales price statistics can be impacted and this might well be the case with the reported median price of property. In August the median price was reported as being $350,000 up from $349,000 in July. For clarification the median price is calculated by taking the mid point of the sequential range of the 4,287 sales – ie ranked from lowest sales price to highest the 2,143th property was sold for $350,000. The chart below shows the data for the median price by month over the past 4 years.

REINZ_median_prices_2007_to_2010

The chart tracks the rise in median price through early 2007 before plateauing and falling in 2008, before again rising again in 2009 with another recent plateau. Medians are a better measure than averages which can be very heavily influenced by extreme sales prices, but still do have inherent weaknesses from a statistics perspective.

A more accurate and nowadays preferred measure of property prices is the Stratified House price measure. This measure developed in conjunction with the Reserve Bank by the Real Estate Institute shows a somewhat different performance of sales price over the last 4 years a shown in the chart below.

NZ Stratified house prices to Aug 10This chart shows the property prices peaking in November of 2007 before falling by 11.4% over the next 14 months. Subsequently the property prices climbed back up during 2009 to within 3% of the peak, however the past 10 months has seen some erosion of price to where the current price in August is still over 5% down on the peak price of nearly 3 years ago.

A further explanation for the significant difference between the median price and the stratified price can be seen by looking at the relative sales volume within distinct price bands. The REINZ statistics measure sales below $400,000; between $400,000 and $600,000; between $600,000 and $1m and property over $1m.

Taking the total sales in the January to August period of 2010 (38,542 properties) compared to January – August 2008 (38,522 properties) and analysing the relative sales by price band is very revealing.

REINZ vol sales by price bands Aug 2010

In this specific period the median price of property has risen from $330,000 to $350,000 a 6.1% increase. The chart though shows very clearly that more higher priced properties are selling this year than two years ago which will effect the median price as it moves the mid point to a higher price point irrespective of the relative sale price of individual properties. The chart specifically shows sales of properties below $400,000 are down 5% – with 1,189 less properties selling in this price band in 2010 as compared to 2008, whereas the sales in higher price band properties are ahead of 2008.

This analysis I believe provides a clear understanding of why we appear to have median price increasing (up 6.1% vs Aug 2008) whilst the stratified price level is actually up only 3.5% (Aug 2010 vs. Aug 2008), therefore property prices in general are still fluctuating and have yet to find a forward momentum.

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Canterbury – how the earthquake is affecting the real estate industry

Posted on: September 13th, 2010 | Filed in Featured, Regional News

Balancing balls croppedA week has now passed since the devastating 7.1 scale quake rocked the Canterbury landscape and brought untold damage to the region and the picturesque city of Christchurch. The saving grace is the fact that there was no loss of life.

As life slowly and hopefully begins to return to some form of normality the question that has been asked is what impact will the earthquake have on the real estate market in the region? An article in the NZ Herald today states that around 150 house sales are in limbo as a direct result of the earthquake as they wait to be able to confirm finance and insurance.

Clearly an event on this scale and with the impact on the built environment will cause uncertainty in the minds of both buyers and sellers. That having been said with a population in the Canterbury region of 518,000 and 202,000 occupied dwellings (Census 2006) business and life will go on and that includes real estate. In July total sales in the region were 651 with 482 in Christchurch city itself. That amounts to close to 16 properties sold per day. Whilst the August sales result due to be published this week will be unaffected there will likely be some impact on September figures as well as subsequent months.

An early indication of the future state of the property market potentially can be gleaned from statistics of the Realestate.co.nz website providing as it does real-time data.

The level of visitor traffic to Canterbury properties took a significant and immediate hit immediately after the quake. This is only to be expected as more urgent matters were top-of-mind. The chart below tracks the daily visitor numbers viewing Canterbury properties for sale (this is the viewing of properties from both within the region as well as nationally and internationally).

CHC_web_traffic

As can be seen the prior 5 weeks saw an average of 3,000 to 4,000 visitors per day – the Saturday of the quake saw visitor numbers drop to below 2,000 with subsequent days climbing back up, closer to 3,000. Whilst still down by a third it is clear that the area is still attracting interest from buyers and sellers.

Another key metric measured by the website is the number of new listings and inventory of unsold properties on the market. The data in the last NZ Property Report and the Canterbury Monthly Property Pulse factsheet both highlighted that the property market in the region as viewed from August data showed a balanced market with an inventory level equivalent to 35 weeks of sales compared to the long term average of 31 weeks.

Since last Saturday, the 4th September, listings are still being added to the website, in Christchurch alone 188 new properties have been listed. Across the region the number of listings are down on a proportional basis, although not that significantly. Based on historical trends the total of new listings coming onto the market across the region look to be down by just 10%.

The media coverage of the events of the past 10 days have provided for us who do not live in the Garden City a sense of what is going on, however we cannot start to imagine what it must have been like to have been there on that fateful morning and for that reason we wish to pass on our good wishes to all the family and friends in this industry in the region. They like all real estate people are very much a part of the local community and I am sure they are doing their utmost to support their communities.

One of the great benefits of social media is hearing from people as they share their perspective and personal experiences. It was a couple of these blogs that caught me eye this weekend; reading the true story of what it has been like down there in the region. Have a read of the personal blog of Phil Hayes and the  Doctor in the House a blog by Steve Taylor.

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