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Archive for the ‘Featured’ Category

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Recessionary stress still felt in number of mortgagee properties for sale

Posted on: April 11th, 2011 | Filed in Buying / Selling a home, Featured, Money Matters

Whilst there maybe some signs of the recovery that most people have been longing for, one of the well known “lag” indicators – mortgagee property repossessions continues to make its presence felt in the NZ property market.

At this time there are around 280 properties on the market in NZ  (covering both residential and lifestyle properties) identified as being in foreclosure where the lender is forcing a sale as a result of the borrower being in arrears on the repayment of the loan or the borrower has signaled to the lender their inability to continue to pay and is therefore looking to exit the property.

There has not been any recent statistics released as to the scale of mortgagee sales since late last year, so in an attempt to shed light onto this sector of the property market we have examined key data from the website of realestate.co.nz.

Reviewing the current state of the market, the absolute scale of mortgagee properties is well below the peak of 2008 and 2009 when close on 400 properties were being marketed in this manner as shown from the chart below.

In absolute terms 280 properties is a significant number, however when put into context it represents less than one half of one percent of all the properties on the market in NZ for sale today – put another way it is only 1 in every 200 properties is a mortgagee sale. Even at the height of the recession the total only ever reached 0.75% of all listings.

This figure is far lower than the close to 10% of US properties that were in foreclosure in the peak recession period of 2008/9 – a situation that is yet to be resolved in many US states where the continuing levels of mortgagee listings and sales continues to drive down the sale prices.

Examining the past 3 years it would be fair to say that the trend for mortgagee listings is on a slow decline. It will likely take a considerable period for all the effect of the Global Financial Crisis and its impact on the NZ property market to work its way out of the system as far as mortgagee listings and for the level to return to the rate of around 100 at anyone time.

Another key indicator of the mortgagee sector of the property market is the use of the keyword search terms on realestate.co.nz as a means to locate mortgagee property. Over the past 3 years we have tracked this each week and the latest chart below shows the recent year.

Clearly the  peak of activity of keyword searching for terms such as mortgagee sale / mortgagee auction / mortgagee properties was back in 2008 and into early 2009. The recent 12 to 15 months has seen this fall away to a fairly steady level. That level is still resulting in these terms being in the top 5 terms searched on the site.

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NZ Property Report – March 2011

Posted on: April 1st, 2011 | Filed in Featured, NZ Property Report

The March 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 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 – March 2011 is published below and is available for download (1.3MB) and distribution.

Summary of the market – March 2011

Any analysis of the NZ property market for March would be incomplete without reference to the impact of the Christchurch earthquake. The Canterbury region is the second biggest property region representing around 15% of the market. In March the level of new listings in the region fell 36% compared to a year ago, whilst the country excluding Canterbury fell only 11%. Based on a representation of the national total it is likely that around 480 less properties were listed in the Canterbury region in the month than would have been anticipated at this time of year.

Nationally the rise in asking price was the most significant single piece of data from the overall report. The asking price nationally is now hovering close to all time highs and is particularly strong in the major cities. Auckland at $551,720 is up 1% as compared to prior month and prior year; with Wellington at $453,021 up 2.5% on last year and 1% from last month. Canterbury at this time shows no significant change in price in line with recent 3 month average.

The level of inventory of unsold homes on the market continues to grow, recording its 3rd consecutive month of rise to break through the psychological level of one year, reaching 53 weeks. Given this high level of inventory, matched to slow levels of new listings it is becoming clear that the high asking price is more likely to be the result of keen interest focused purely on new listings; leaving older listings somewhat “languishing on the shelf” at what could be unrealistic prices or presentation that needs refreshing to attract buyers.

Asking Price

The truncated mean asking price for all new listings in March rose again to $421,940 up from $420,265 in February. On a seasonally adjusted basis the asking price rose 1% indicating a continued confidence amongst sellers.

The trend of the past 2 years shows continued strength in asking price expectation.

New Listings

The level of new listings whilst rising in March was still 15% down compared to March last year. The current 12 month moving average total shows 131,722 new listings down 6% as compared to the prior 12 month period. The market continues to remain quiet in terms of listings and sales as has been seen in the REINZ sales reports for the last few months with both January and February reporting record lows. February sales totaled 4,502.

Inventory

The level of unsold houses on the market at the end of March actually fell from 52,672 in February to 51,980 in March. This represented the equivalent of 53.1 weeks of equivalent sales, as assessed on a seasonally adjusted basis.

The key driver of this rising inventory is more a reflection of somewhat lackluster sales than excessive new listings. The absolute level though at over a year of equivalent sales will continue to impact the market and maintain the “buyers-market” perspective.

Regional Summary – Asking price expectations

With a strong national asking price growth of 1.9% as compared to the recent 3 month average, the expectation would be to see a consistent trend across the country. The fact is that 11 regions of the 19 did post rises in asking price, however there were some significant falls. The majority of the falls were in provincial regions.

Both Wellington and Auckland saw asking price rise close to peak, with Wellington particularly strong with a 4.1% increase to come within $2,500 of the peak asking price indicating confidence in vendor expectations.

By contrast the situation in Northland and Marlborough, which both showed significant falls in asking prices taking those regions to record low asking price levels.

Regional Summary – Listings

Recent months has seen a consistent decline in listing numbers when judged on a year-on-year basis, this month of March shows some change.

Four regions posted an increase in new listings with Waikato the standout showing a 9% increase to 994 new listings, the highest level in over 3 years.

As previously noted the Canterbury region saw a 36% fall. Over the past 7 months since September a total of 8,558 new listings have been brought to the market across the region. This is down 30% from the 12,232 recorded in the same period in the prior year.

Wellington regions showed a strong performance with a 6% increase. This region has been active with increases consistently over recent months taking the 12 month average up 6% on the prior year.

Regional Summary – Inventory

A consistent picture of high inventory of unsold house on the market pervades the region map. There are pockets where levels are moderate, particularly in Bay of Plenty and Central North Island, however the remainder sit well above long term average.

Of the 19 regions a full 8 of them are now sitting at record high levels of inventory – Central Otago, Hawkes Bay, Manawatu / Wanganui, Nelson, Northland, Otago, Taranaki and the Wiakato.

In total provincial NZ which comprises all of the regions excluding the main centres of Auckland, Wellington and Canterbury reached a record peak of inventory of 76.7 weeks which compares with 36.6 weeks in the metropolitan areas.

These record highs as noted earlier are as much a factor of slows sales, are clearly offering a broad range of options to buyers active in the market.

Lifestyle

Lifestyle property performed fairly strongly in respect of new listings with a total of 1,096 coming onto the market in March up 17% from February and in line with March last year. The asking price expectation fell by 2% in the month from $552,591 to $542,975 which was down 8% as compared to March 2010.

Despite the overall levels in Canterbury lifestyle listings remained steady with 130 new listings as compared to 144 in March 2010, the reality would be that almost all of the lifestyle properties in the region would be well outside of the immediate vicinity of Christchurch city.

Apartments

Apartment listings grew in March but at 516 failed to reach the level of 613 seen a year ago. Based on a 12 month moving average volumes of apartment listings continue to fall with 6,216 in the most recent year down 9%. In Auckland the trend is down with 5% decline on a 12 month moving average basis. March saw 332 new apartment listings in Auckland down 8% from a year earlier.

The asking price expectation rose 4% in March from $365,150 to $378,494. This level though is down 3% as compared to a year ago and down 4% as compared to the recent 3 month average. Auckland apartment listings reflected a similar trend down 4% year-on-year.

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:

Realestate.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 95% 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 1,020 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 12,247 new listings in the month of January a total of 156 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 1.6m 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 120,000 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 1,020 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for March 2011 can be downloaded here (1.3MB 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 April 2011 will be published on this website on Sunday 1st May 2011 at 10am.

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The stress and pressure of home buying

Posted on: March 28th, 2011 | Filed in Buying / Selling a home, Featured

Continuing this series of blog posts providing an insight into the experience of house hunting and buying. This is the 3rd and concluding part and follows “Sharing the experience of house buying” and the “Open homes and property data – the DIY of home buying”.

Selling method

The chosen method for selling this particular property was an auction.

Our current situation is that we own our own house, however at this time we have not placed it on the market. This situation I would guess would not be uncommon, as many people start by “watching the market”, waiting for the possibility of a property that really excites them to come onto the market; and at that point make the move to list their house for sale.

Our property is in a ready state to be put on the market. We had spoken with a local agent who had assessed our property and judged that we could very likely find an interested buyer in the current market, at a price which would afford us sufficient funds to buy this new property we had found. However this situation of not being “cashed up” meant that an auction was not our preferred approach to buying this house; it was however the chosen method of selling advised to the vendor of this house by the agent.

Whilst an auction did not suit our particular situation, this sale process does have is advantages and disadvantages. Clearly it’s attraction lies in the fact of the commitment it forces upon serious buyers to bid unconditionally and thereby guarantee a sale for the vendors. However the downside of an auction as is typified by our circumstances, is that it can potentially restrict the potential pool of buyers to just those who are financially in a situation to bid. A committed bidder needs to be in the full knowledge that if they are the successful bidder, they will need, immediately upon the fall of the auctioneers hammer, to sign an unconditional binding agreement to buy the property and write out a cheque as a deposit for 10% of the sale price.

Our situation was that whilst we could not bid on the property, we could offer a price which in our judgment would be a good price as compared to the market value. It is true that we could have presented a conditional offer to the agent prior to the auction; however we were reluctant to do this, as to do so was in our judgment revealing our hand. Our preference was to be patient and see if the auction surfaced a bidder sufficient to reach the vendor’s reserve.

As an added point of reference in researching this property, we did undertake a Google search of the owners. Their details were on the title to the property, which is public record. In some cases the title records a family trust which can limit such reseaerch. There is nothing illegal or even immoral about this action – we sought to find out public information about the owners – information which in our judgment could be helpful in appreciating any circumstances surrounding the sale, should that be available. I will not disclose the facts that we discovered; however what I will say, is that we discovered facts that in our judgment could have been a factor in why the owners were selling.

In the week leading up to the auction we did become resigned to the fact that as we could not bid at the auction, in which case our chosen strategy was to attend the auction with the express intention of viewing the outcome, and if the property was “passed in” with the reserve not met, then we would act to introduce ourselves to the agent as conditional buyers.

One thing that did surprise me in that final week leading up to the auction was the lack of a follow-up call from the listing agent. I would judge that we had made ourselves very conspicuous as potential buyers. We had visited the open home 4 times over the period leading up to the auction. We had completed the open home book each time and after the 3rd visit the agent greeted up warmly by name. So the agent knew who we were; had our full details including my business card and also knew where we lived. Despite all of this, except for a single telephone call after the first open home, we were never contacted again by the agent to ascertain our interest in buying, nor clarifying our situation. No email or call. That did surprise me, as I was sure we would have been seen as good prospective buyers.

Taking it one stage further given the information we had shared, the agent could potentially have undertaken some due diligence on us, given the knowledge of our address and contact details. Some Google searching and property record reviewing which all agents have access to would have helped profile us. All public information open on the web.

The Auction

The day of the auction arrived, as did a good turnout of locals. There is always that wonderful sense of uncertainty looking around at the people attending an auction and wondering if that person is a buyer or an interested observer and also who is the owner as they need to be there on the day. In total the on-site auction attracted around 20 people.

The auctioneer provided as usual, a summary of the property and went on to state the terms of the auction. Within this latter statement, he made a comment that completely surprised me.

Now whilst in attending a few auctions over the years I have been made painfully aware that the successful bidder would need to sign an unconditional agreement and pay a deposit of 10%, I had never heard the statement made at this preamble to this auction to say “that as had been agreed with the vendor some of the bidders had pre-negotiated variances to the terms of the deposit and the settlement date”. This was a surprise to me. Now maybe this is a recent change, but I did not know that there could be any terms that were negotiated. I do appreciate that the basic term of unconditional purchase would always still apply, but a delayed settlement might have been an option we may have been interested in. Anyway I chalked that down to experience.

To present the exact process of the auction I am keen to share the actual bidding and negotiation, however rather than detail the actual bids (which potentially could disclose the property) I will use numbers based on indexing the actual numbers to the current median price of property sold in NZ in February 2011 – $350,000.

So I will start by “disclosing” that the property was sold at a price of $350,000.

The auction began slowly with very hesitant bidding at levels well below the CV. The equivalent CV would be $285,800 and the first bid was for $264,000.

As ever (well from my very limited experience at least) those people who bid first at auctions tend not to be the ones who buy. In this case a new bidder entered the process at the second closing call and for a further 5 minutes the bidding crept up well above CV reaching after many tortuous assumptive closings by the auctioneer a price of $334,000.

At this point the auctioneer called for a 3rd and final time and passed the property in for negotiation between the highest bidder and the vendor.

After 15 minutes of protracted discussions and separate negotiations between the parties facilitated by the auctioneer the “stage” was reset with the auctioneer announcing that the property was now on the market at the price of $350,000. The auctioneer proceeded to await any counter bids, not a word was said and the hammer fell at the sale price of $350,000.

The Conclusion

So how did we feel at the end of this process?

I have to say surprised. We made some private bets as to the level of top bidding and the reserve. We felt that the bidding would not reach $350,000. Also we were sure the vendor had a higher expectation of sale price and had set a reserve at $387,000!

I can with full honesty say that we would have paid $370,000. We would have made that as a conditional offer on selling our house. I would go even further and say that we would offer that today if the property came back on the market. Additionally there may have been another conditional buyer out there like us who may have paid even more than we would have paid – maybe not, but we will never know. The property is sold, the vendor moves on and the new buyer moves in and the property market chalks up another sale in March 2011.

So what does this detailed insight into the buying process highlight? Well, as I have said from the start this process was not a piece of research, I was a genuine buyer and that is the standpoint upon which I make these comments. So in this situation the vendor could have potentially received more money for their house. That extra would have come with conditional risk which the difference in price may not have justified.

The whole process has heightened my awareness of the scale of research required in the process of buying a house. The process has also reaffirmed the appreciation of the emotional roller coaster associated with the process of buying a house. It has also I hope helpfully highlighted to real estate agents some of the issues and behaviours of buyers which they could take note of to enhance the marketing and services to buyers.

As to the future – well we will probably keep looking! – and researching.

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Open homes and property data – the DIY of home buying

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

The open home - NZ property buyingContinuing this series on “Sharing the experience of house buying” in which I am keen to provide a first hand experience of home hunting and buying.

The Open Home

A house is exactly the same as any other product you buy – a car, a sofa or a piece of clothing. You want to be able to touch and feel the merchandise and in the case of a car – take it for a test drive. In the case of a house the “open home” is the opportunity to do a virtual test drive (although in the UK a couple of years ago there was a more immersive experience offered!).

An open home on a summer’s day is a sure-fire way to ensure you get a large number of people to come and view the property, and for this property it appeared that the whole neighbourhood had turned out judging by the hundreds of pairs of shoes on the front porch.

An open home allows for that voyage of discovery as you begin to see how those photos accompanying the online listing fit together as you move through the house.

Returning to the house for the second open home on the Sunday amazed us as to the extent of detail we had completely overlooked on the first viewing – good bits and bad. The other tactic of the second visit was to use my iPhone with its Realestate.co.nz app to capture specific photos not provided as part of the photos on the listing – I took over 60 additional photos to provide a rich visual record for later review.

During the visit I asked the agent if there was a floor plan for the property, either as a service provided by the likes of Open2view or as any property file records – unfortunately I was informed none was provided for this property.

Floorplans

Later on back at home armed with the now more extensive photo library we sketched out what we could recall of the plan for the house; in this way helping us better assist in visualizing the potential of the property in the context of where furniture might fit as well as which rooms we could use for what use (we are fortunate in not having children at home).

The exercise certainly left me with a clear view that floor plans are now a necessity for property marketing and yet are the rare exception in NZ. The ability to be able to sit comfortably at home and review the layout with contextual photos should be a basic part of all property marketing.

To help me I quickly found an online free tool to provide the ability to draw a floor plan which took so little time but offered such great reward.

Now with a more detailed floor plan of the house I set about collecting more data to assist in a more detailed research of the property.

Property data

The first set of data to purchase was a report from Zoodle which for $24.95 provided a comprehensive summary of 20 recent sales of similar property in the area surrounding the house.

This report shone a bright light onto the list provided by the real estate agent. Their list showed 10 recent sales of property in the area. What was glaringly obvious was the omission of a property which was just 4 houses up the street. This property had sold 12 months ago and then resold 3 months ago. The omission of this property from the report provided by the real estate agent called into question the value of the agent’s report.

The second purchase I made online was a full property report from the local authority. Auckland Council (which now covers North Shore City) provide an online service which for just $26 provides a very comprehensive folder accessible and downloaded online. The turn around time is next working day and can be accessed as an online download or for $10 more can be couriered as a CD Rom. The property report tends to include consents, applications, plans, reports, photos as well as any code compliance for project work. Availability to such reports will vary by property and by local authority around the country, but it is certainly worth checking out.

This property file was invaluable in dating the key projects which had been undertaken on the property as well as some great floorplans from many periods over the past couple of decades. So much data, so readily available – all online.

Over the next week leading up to the auction date we sat down and planned out our thoughts about the appeal of the property as well as what we thought it was worth in today’s market.

Property valuation

Assessing the true value of property is a complex matter. The only true measure of value is what a person is prepared to pay for it. The fact is that property is not frequently traded and therefore there is no defined liquid market which allows market pricing to be accurately monitored.

Valuation estimates are available online which can provide a guide. The definitive valuation (as required by a bank for lending purposes) comes from a registered valuer, this type of valuation is charged based on the value of the property and can cost anything up to a $1,000. In our case we chose to use the online report service offered by Zoodle. For $49.95 you get an estimated valuation of a property, the report states a confidence factor as to the valuation as well as a valuation range. It also provides evidence to support the valuation, which is based on recent sales of similar properties, it evaluates the relevance based on location proximity to the property, the similarity of the property based on land area and house area and also rateable value.

In the case of the house we were interested in the estimated valuation on the Zoodle report was in excess of the current rating valuation, not a surprise to us as recent sales in the area had sold at anywhere from 10% to 35% over the current rating value.

Coming up – The Auction

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Sharing the experience of house buying

Posted on: March 19th, 2011 | Filed in Buying / Selling a home, Featured, Online marketing

House buying is a significant undertaking and from a personal perspective not something that I have undertake for over 10 years, as we have been, and remain very happy in the home we have owned for this period. However a property appeared on the market recently. One, which really captured our imagination and set our hearts racing. As genuine and interested buyers I thought it would be very interesting to share the experiences and feedback on the process of this house hunting / house buying.

The house in question basically ticks all the boxes for us of a house that we would very happily move into – a house that, having kept our eyes on the market for many years we thought in that classic sense that there would “never be a house that would meet or exceed our expectations”! (and at a price that we could afford!)

I propose to post a number of articles in the next week or so as we progress through the process, a process that may or may not lead to us buying the house.

I intend to be completely honest about our experience. I have been completely transparent with the agents concerned, they have my business card as CEO of Realestate.co.nz and we are approaching this as committed and serious buyers, not as a piece of consumer research; although I hope that there will be some interesting insights.

I do not intend to disclose the specific details of the property nor the names or location of the agents. I trust that the insights, observations and feedback will be of interest to buyers, sellers and agents alike.

The first experience for me in relation to this property was one of those moments of surprise and delight. I received a phone call from an agent, someone who I had not met previously. She stated politely that as we had previously visited an open homes a couple of months ago she was keen to provide us with early notification of a property about to come on the market later that week that may interest us – if we were potentially in the market for this type of house in this location.

I have to say I was very impressed by the professional and considerate manner of the agent. We had not registered to be on a database but given that we had not been barraged in the preceding few months by potential properties I was not offended by this proactive approach, especially when the property so completely matched our criteria.

The agent provided us with the address and a brief description allowing us that night to drive by the property and more importantly look up details on the property for free on Zoodle. First impressions – perfect!

I should point out at this time that the agent who highlighted this property to us was not the listing agent!

Listings presentation online

The property appeared on realestate.co.nz the next day and was superbly presented with a great selection of photos, providing a comprehensive view of the property. With the address displayed on the property nowadays provides so much potential to investigate the local community and amenities all from the comfort of your home computer.

Whilst property descriptions are useful the real power of a listing online lies in the photos and address. When it comes to photos there is never a situation where I could say there could be too many as it is amazing how easily you forget some aspects of a property from an open home visit where comprehensive photos can prompt you to recall.

Coming up – the open home and floor plans

7

February property market remains subdued

Posted on: March 16th, 2011 | Filed in Featured, REINZ Monthly data

The latest data released by REINZ for property sales in February show that the property market is still somewhat subdued.

February is traditionally an active month as summer interest in property grows after the Christmas and summer vacation period finishes. It is usually the 3rd most active month in terms of sales despite its shorter period. It tends to see sales around 6.5% higher than an average month.

In February total sales reported by real estate agents around the country and collated by REINZ amounted to 4,502. This compares with 3,252 in January and 5,029 in February last year. Seasonally adjusting the figure shows a 12% rise from January.The chart below details the seasonally adjusted sales by month going back over 5 years and shows the market trend.

NZ Property sales seasonally adjusted 2006 to 2011

Recent sales levels have been low. The February 2011 figure is the lowest February total ever recorded going back to 1992, it is the first time sales in February have fallen below 5,000. The rolling 12 month sales now totals 55,362 down from 69,390 a year ago.

One contributory factor for the lower sales in February and very likely to be a key factor in future months is Christchurch. The February total sales in Christchurch was just 244 as compared to 519 in February last year. The Canterbury region is the second largest region of the country typically representing just under 15% of total national sales. The region suffered a significant slow down after the September quake and that is only likely to continue for many months to come.

Across the country sales have been variable as shown by this regional map of trends in sales volumes comparing February 2011 with February 2010.

NZ regional property sales chart for Feb 2011 REINZ

With just 4 of the 19 regions showing actual year-on-year growth in sales volumes the mood of the market is clearly subdued. The deep red colour for 12 of the 19 regions indicates where year-on-year volumes are showing more than a 5% decline.

The median price of sales reported by REINZ as shown in the regional chart below provides a window to regional price movements on a year-on-year comparison. The national median price did not move between February 2010 and February 2011 at $350,000.

NZ median property sales price by region for Feb 2011 REINZ

There were 4 regions showing median price increases of more than 5% year-on-year with 5 regions showing a fall in median price of more than 5% year-on-year.

Auckland with a 3.3% median price rise complemented with a 1.4% volume lift year-on-year would appear to be a lead region for the country as was commented on in the recent analysis of the Barfoot & Thompson data released earlier this month.

6

Analysis of the Auckland property market

Posted on: March 9th, 2011 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

Last week Barfoot & Thompson, Auckland’s leading largest real estate company published their monthly sales statistics. The headline from B&T was “Housing market resilient, sales jump in February” – interestingly from these monthly statistics the the media commentary varied between “Auckland housing market improves” (NZ Herald) to “No housing glut in Auckland – agent” (TVNZ). I thought that a deeper analysis and visual representation of the data for the important Auckland market would be of value.

Property Prices

The price of property is always of interest to buyers, sellers and property owners. Barfoot & Thompson figure for February showed an average price of $521,887 recording a 1.2% increase from January. The average sale price in February last year was $521,324 indicating that prices are in the main flat as judged by the sales made through the B&T offices. The chart below tracks the average selling price (3 month moving average) for Barfoot & Thompson sold properties over the past 4 years. The calendar years of 2007 / 2009 and 2011 are shown as red part of the line with 2008 and 2010 as blue part.

The chart ably shows the peak of the market through 2007 before the property market collapse. Two years later in 2009 it shows the return to the peak before seeing in 2010 a further fall in the sales price with some erratic movements.

The data from B&T can provide a good early insight into this key market, as their data is released earlier in the month than the REINZ sales data. At the same time the B&T data is based on the average sale price which is naturally influenced by the mix of high vs. low price properties. In recent years as volumes have fallen so the data of average price can be affected by the mix of properties sold. It is for this reason that I favour the REINZ based Stratified Price analysis carried out by the Reserve Bank. This analysis seeks to remove the influence of the mix properties sold in a month. The chart below shows this analysis of the stratified mean price for Auckland over the past 4 years.

The chart has been highlighted to show the peak of the market across the Auckland region in July 2007 at $510,197. Through 2008 the price of property sold dropped to a low of $435,700 before recovering in 2009. Since early 2010 the sale price has slipped to a current level of $464,425 still off 9% from the peak over 3 years ago.

Property Sales

The health of the market is often best represented by the number of transactions, as confidence in the market stimulates both buyers and sellers. The February sales by B&T totaled 619, up from the 563 in January and pretty close to the February 2010 total of 626. The chart below tracks the prior 3 years of sales by B&T.

From the chart it can be clearly seen that sales in February lifted from the lows of December and January. The key question will be whether the early indications of 2011 result in a lift for the remainder of the year as was seen in 2009.

The one factor in property sales which can distort the sales trend is the seasonality – the reality is that more properties are sold during the key summer months than the winter months, this can tend to distort the numbers per month. Removing this seasonality factor provides a clearer picture as to the underlying trend in the property market – a truer picture of the health of the market. The seasonally adjusted sales for the B&T sales of the past 3 years are shown in this chart below.

The chart better represents the trend of sales which is showing a steady monthly level for the past 12 months of around 600 per month. This compares with c. 500 per month in 2008 and 0ver 700 per month in 2009.

Inventory

The number of properties on the market also provides a valuable assessment of the health of the property market. The monthly NZ Property Report tracks the inventory in relation to the rate of sale, thereby providing a perspective based on equivalent weeks of sale of existing inventory. The chart below shows real levels of inventory of property on the market over the past 3 years.

The chart speaks to the media story of there not being a glut of properties on the market – that would certainly be substantiated by the chart, however the market continues to hold a relatively high level of properties for sale, at this time there are 13,720 properties for sale in the Auckland region being marketed by licensed real estate agents.

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NZ Property Report – February 2011

Posted on: March 1st, 2011 | Filed in Featured, NZ Property Report

The February 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 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.

The February 2011 report covering the final month of summer shows an active level of new listings coming onto the market. The total of 11,395 is up 37% as compared to January, but down 20% as compared to February last year. The seasonally adjusted number of new listings for February shows a 9.5% increase. All of these numbers show that in the context of recent market activity the property market in NZ is somewhat more active, however when assessed over the recent couple of years the market continues to be weak and the recent 12 months is the lowest level of activity with just 133,883 new listings in the recent 12 months, down 3% as compared to the same period 12 months ago.

The expectation of vendors remains confident despite the low level of sales volume. The truncated mean asking price rose in February by 3.3% to $420,265. There is a traditional seasonal lift in asking price at this time of year and allowing for the seasonal adjustment the asking price actually fell slightly by 1.1% to $412,128. This February asking price of $420,265 does come within 2% of the peak of the market asking price from back in November 2007.

The inventory of unsold houses rose slightly in the month, having fallen for the past 3 months. The level of 48.9 weeks of equivalent sales still sits well above long term average at 40 weeks. The key factor for this continual high level of inventory is the weak sales volumes which with just 3,252 property sales in January, places the past 3 months of sales as amongst the lowest 3 month period on record with just 13,438 total sales.

In overall terms the NZ property market continues to turnover at a slow rate. The relative levels of inventory as matched to sales volumes is high indicating a buyers market. However the actual level of new listings continue low which is resulting in specific markets seeing a genuine shortage of listings which is stimulating price as a function of unsatisfied demand. This is most conspicuously seen in the major cities. Auckland especially is showing this with an asking price expectation which peaked in December and in February continues at high levels. Equally the level of new listings in the Auckland market is amongst the highest in the country with over 34% of all listings coming from this region, the highest share seen over the 4 years of this report

A full print version of the NZ Property Report – February 2011 is published below and is available for download (1.3MB) and distribution.

Summary of the market – February 2011

After seeing the first two months of summer result in record low levels of new listings the month of February saw a strong rise with 11,395 new listings come onto the market. This level, whilst up a seasonally adjusted 9.5% as compared to January was still well down on the February levels of 2010 (14,329) and 2009 (12,164). This clearly shows that the overall sentiment in the market is quiet as was witnessed by the January sales levels reported by REINZ of 3,252, the lowest month on record.

The rise in new listings coupled with the low sales saw the inventory of unsold homes on the market rise again as measured on an equivalent number of weeks of sale basis. Having fallen for 3 months in a row the inventory levels rose to 48.9 weeks – well over 11 months supply. This level as compared to a long term average of 40 weeks means the property market is still very much in the camp of a buyer’s market with ample selection of properties to review.

Asking Price

The truncated mean asking price for all new listings coming onto the market in February rose by over $13,000 from $406,525 to $420,265.

On a seasonally adjusted basis the asking price actually fell by 1.1% to $412,128. The summer peak of new listings traditionally sees a rise in asking price.

The current asking price edged closer to the peak of asking price back in October 2007, it is currently just 2% below that peak.

New Listings

The record lows seen in the months of December and January when in total 17,224 new listings came onto the market, have been replaced by a surge in listings in February with 11,395 new listings coming onto the market. This level whilst relatively strong as judged by recent months, is significantly lower than prior years. The February total shows a 20% decline as compared to February last year.

On the most recent 12 month period a total of 133,883 new listings have come onto the market which represents a 3% decline compared to the same period last year.

Inventory

The level of unsold houses on the market at the end of February fell slightly to 52,673 from 53,297 at the end of January. This represented the equivalent of 48.9 weeks of equivalent sales, as assessed on a seasonally adjusted basis.

The inventory of unsold houses remains high in absolute terms as the level of sales activity continues to be so weak.

At the current level the inventory still remains well above the long term average of 40 weeks.

Regional Summary – Asking price expectations

In spite of the overall rise in asking price nationally from $406,525 to $420,265 the regional picture shows significant variance. Just 7 of the 19 regions are showing increases in asking price. Of the remaining 12, four regions are showing falls in asking price of greater than 5% when judged against the recent 3 month average.

The significance in the price movement in the national asking price is the fact that the 3 major metro areas of Canterbury, Wellington and Auckland collectively representing 54% of all listings and in the month all saw increases in asking prices of up to 3%. In the case of Auckland and Wellington the February asking price was within 3% of the peak pricing which was reached towards the end of last year, this would indicate that the local markets in these key cities are more active with pressure on prices more noticeable than in provincial areas of the country.

Regional Summary – Listings

Judging the regional property market based on the number of new listings and the change over the past 12 months potentially presents a misleading picture as all regions are showing a significant year-on-year decline. This picture presented in the chart would normally indicate a move to a sellers’ market when listings are in short supply, however at this time the governing factor is the weakness of sales. So despite the low volume of listings the rate of sale still means that inventory of unsold properties in overall terms is growing.

In total 9 of the 19 regions are showing volumes of new listings over 20% down as compared to February last year. The issue could arise in the coming months when if sales were to be stimulated by seasonal factors matched to favourable lending rates the lack of new listings may result in pressure in local markets.

Regional Summary – Inventory

The inventory of unsold houses on the market rose in February after seeing 3 consecutive months of falls through the new year period. At 48.9 weeks this represents over 11 months of equivalent sales of property on the market. This results in 52,673 properties on the market (excluding sections).

Across the country there are just 2 regions (Central North Island and Bay of Plenty) that have a fair balance between inventory and sales. The remaining 17 regions comprise 10, which are significantly having an inventory well above long term average with the remaining 7 regions having level just above long term average. Such levels of inventory above long term average highlight a buyers market with ample selection of property for sale.

It is now over 12 months since the market last showed an inventory level below long term average as was seen through the 2009 year.

Lifestyle Property

A total of 936 new listings of lifestyle properties came onto the market in February. This represented a 6% increase on a seasonally adjusted basis from the prior month, when seen against February last year it represents a 17% decline indicating that the lifestyle sector is performing in line with the overall property market.

The truncated mean asking price rose by 2.2% from January to a level of $552,591. This level still remains well below the peak of asking price seen in February 2009 at $633,811

Apartments

The number of new apartment listings coming onto the market in February totaled 478 a rise of 32% as compared to January although on a seasonally adjusted basis it represented a 4% fall. As with other sectors the relative level of new apartment listings remains subdued with the February 2011 level showing a 36% year on year decline.

The truncated mean asking price rose very slightly to $365,150 from $362,041 in January, this level is down 8% as compared to the recent 3 month average.

The representation of Auckland listings for apartment of the total for the country rose to over two thirds with 321 new listings with an asking price expectation of $324,716.

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:

Realestate.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 95% 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 1,050 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 11,395 new listings in the month of January a total of 133 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 370,000 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 120,000 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 1,050 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for February 2011 can be downloaded here (1.3MB 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 2011 will be published on this website on Friday 1st April 2011 at 10am.

6

The leaky home legacy becomes a global phenomenon

Posted on: February 22nd, 2011 | Filed in Architecture & Construction, Featured

New Zealand, as has been well documented is facing a legacy of building issues related to “leaky homes” – a legacy for which estimates vary, but seem to be around $11 billion according to a recent PWC survey, with potentially up to 89,000 properties effected. The fact is emerging though that this phenomena is not unique to NZ. The US is appearing to show the same cracks, metaphorically speaking, in their housing stock which equally could cost them many billions of dollars. Nor in fact was NZ the first country to suffer this damaging phenomena as housing in Vancouver was discovered to have suffered from leaky buildings way back in the mid 1990’s

In the US during the 5 years at the start of this millennium around 10 million new homes and apartments were added to the housing stock as reported in the recent headline article in Business Week. This boom in construction was fueled by the easy credit environment which went on to become the catalyst for the sub-prime meltdown and subsequent Global Financial Crisis. The scale of the US issue is not as yet estimated. All that is reported is that defects identified in properties built during this period are running at twice the rate of the prior 5 year period on a per property basis.

The roots of both countries construction issues have commonalities – construction detailing and trade skills.

The NZ leaky home issue may be seen more conspicuously in the monolithic cladding form of construction prevalent during the period, however the route cause is as ever the attention (or rather the lack of it) to detail in design, material specification and installation skills.

The US issue is not as conspicuously visualized through a design style, but is being put down to the hyper demand for new construction which led to poor construction technique as a function of inadequate training and supervision as the industry sucked in thousands of workers to meet the burgeoning demand.

The scale of the problem is strikingly highlighted in the article by reference to a 25 storey apartment tower in Seattle which is being demolished even though it is only 10 years old. The tower pictured below has been found to have been built without adequate corrosion protection on the supporting steel cables in the concrete structure (Seattle Times report).

0

CEO’s who Tweet

Posted on: February 17th, 2011 | Filed in Featured, social media

I was recently invited to speak at the Auckland Social Media Club monthly gathering on the subject of Twitter.

Twitter is something that I have grown accustomed to, closely bordering on addicted to over the past 2 years. I see it as a valuable business tool and this is the approach I took in sharing my 15 minutes of thoughts about Twitter and how I use it to enhance our brand, engage with our consumers and customers and establish our position of thought leadership in the real estate market.

The assembled audience were fortunate to not simply hear my perspective on the subject of CEO’s who tweet, but were also able top hear from Chris Quin, the CEO of Gen-i who hosted the evening in the fantastic new Telecom Head Office in Auckland.

I think on reflection of viewing the 2 presentations we complement each other pretty well. We share somewhat different perspectives and insights. There was some challenging discussion and debate after the presentations on the night. Should any further questions or discussions flow from watching these videos I will very happily engage on this blog to answer such questions or challenges.

I am conscious that the video does not capture the slides I used to support my presentation so here they are:

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