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June property sales signal continued weakness

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

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

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

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

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

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

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

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

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

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

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

Mortgage approvals data adds to the stable of valuable property stats

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

With the Chinese currency set to rise NZ property could be an attractive investment

Posted on: July 3rd, 2010 | Filed in Featured, International

The Chinese currency (Yuan) is predicted to rise in the coming months following the decision in early June to remove the pegging of the currency to the US dollar. The strategy adopted over years ago was designed to stimulate exports by effectively depressing the value of the currency.

Now that the Yuan will become more of a floating currency its appreciation as a function of projected economic growth will improve the overseas purchasing power of Chinese nationals looking for investment options. The domestic property market in China has gone through a boom and this is predicted to drive smart investors to seek overseas options. This could result in more Chinese buyers for NZ property.

Fact / Hypothesis / Wishful thinking? – only time will tell. However it is very interesting to use the power of the property website of realestate.co.nz to examine overseas traffic particularly from mainland China and Hong Kong.

The rich data of a website is perfect as a source to analyse just such a hypothesis – using the IP address analysis it is possible to detail exactly what proportion of all traffic to the site comes from which country and what they look at on the site.

Analysising this data over the past 18 months shows a striking fact – that as the currency exchange rate between the NZ dollar and the Chinese Yuan has risen and fallen so the level of viewings by Chinese and Hong Kong based computers has followed an identical path. This pattern is unique to these markets as the metric is not absolute traffic, but percentage of all traffic. The chart below shows this very clearly.

The red line with the right hand axis measures the value of the purchasing power in NZ dollars of the Yuan, whilst the blue line with the left hand axis tracks the percentage of all visitors to the website each month from mainland China and Hong Kong combined.

As to what this audience is looking at – the answer simply and in some ways not unexpectedly is apartments. The chart below tracks the traffic to just apartments on the realestate.co.nz over the same 18 month period compared to traffic to all listings on the website, on the same scale axis.

The chart shows the percentage of all visitors looking at apartments viewing from mainland China and Hong Kong as the red line which is signifcantly above the same measure for percentage of all visitors looking at all listings on the website as the blue line. Also of note is the significant rise in apartment viewing since late 2009. At the peak in late 208, over 2% of all visitors viewing apartment listings on the site were from China and Hong Kong and the current level of interest is certainly heading that way again.

NZ Property Report – June 2010

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

The June 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 June. 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 summary view of the report for June 2010 is that the market continues to witness a confidence amongst sellers, who are keen to market their properties, and who despite the relative stock of property on the market signal at this stage no further easing of asking price expectation.

A full print version of the NZ Property Report – June 2010 is published below and is available for download (1.4MB) and distribution.

Summary of the market – June 2010

The property market continues to attract sellers, witnessed by the relatively strong level of new listings with 11,106 coming onto the market in June. This level is up 16% on the same month last year. At that time in June 2009 the market was experiencing a listings’ shortage as well-financed buyers where negotiating hard with sellers keen to offload their property as property prices had fallen through late 2008 and early 2009, and uncertainty surrounded the future direction of pricing in a market so accustomed to property price appreciation. This situation is best seen from the perspective of inventory levels – 35 weeks of equivalent sales volume on the market a year ago compared to 45 weeks today.

The asking price expectation has moved little in the past month following the more significant drop between April and May. At the time this was judged to be a pragmatic reaction by sellers eager to “meet the market” in price terms and seek to attract what continues to be a weak level of buyer activity. The truncated mean asking price for June at $410,058 would seem to indicate a staunch position taken by sellers as the revised level they judge to be the “market”, not requiring further adjustments down in price at this time.

As briefly commented upon in last month’s report the budget announcement in mid May regarding property investment had the potential to impact the supply side of the market in terms of new listings in June and July. Whilst the level of new listings in June was up on a seasonally adjusted basis, the asking price expectation change would not be seen as reflective of the impact of rental properties coming onto the market, as this would likely be seen to drag down the truncated mean price whereas the case was that the asking price level edged up in June.

Asking Price

Asking price expectations of new listings coming onto the market rose very slightly in June following the fall in May. This would seem to indicate that sellers recognise the need to price according to the market conditions which show little signs of appreciation.

As compared to a year ago the May 2009 the price was up marginally by 1.7%, however the truncated mean price for the month of June is still 4.4% below the peak of the market back in October 2007.

New Listings

The volume of new listings coming onto the market fell again in June to 11,106 – down 5% from May, however when the expected winter slow down is factored in with a seasonally adjusted factor the true state of the new listings market shows a 5% increase.

Over the 12 months to June 2010 a total of 145,920 new listings came onto the market. This was up 8% on the same 12 months to June 2009.

Inventory

The level of unsold houses on the market at the end of June totaled 51,916 barely changed from the May total. This represented the equivalent of 45.3 weeks, as assessed on a seasonally adjusted basis.

The inventory levels are beginning to fall having risen to their peak in April at 51.6 weeks of equivalent sales.

Regional Summary – Asking Price Expectations

The asking price expectation of sellers in June reflected the current state of the market with only a marginal change following the fall in May.

Across the country the main view is that asking price expectation is coming under pressure with 11 of the 19 regions reporting asking prices which are below the recent 3 month average. The main metropolitan regions of Auckland, Wellington and Canterbury all showed an easing of asking price. There was a notable and significant increase in asking price in the Queenstown Lakes region from $523,760 to $642,710 coupled with a 29% increase in new listings.

Regional Summary – New Listings

As the regional map shows the overall sentiment of the market remains in the territory of a buyer’s market, a full 15 of the 19 regions are showing a year-on-year increase in new listings, with 10 regions posting increases of over 20%.

The larger regions of Auckland, Canterbury, Waikato and the Bay of Plenty all showed year- on-year increases of 10% or less, although the Wellington region bucked the trend with a 29% year-on-year increase in new listings.

Dividing the country up into metropolitan and provincial areas, the metro areas (3 key centers) are experiencing a lower rate of increase in new listings (+12%) as compared to provincial areas (+21%).

Regional Summary – Inventory

The picture of the regional property market is showing signs of changing. For most of the year- to-date the view of the market has been very clearly skewed to a strong buyers market. However as the chart shows there are some easing in the relative levels of inventory around the country.

The chart represents the actual inventory of unsold houses (measured in terms of equivalent number of weeks of sales) by region matched to the long term average (LTA) inventory level. An inventory level significantly higher than the LTA indicates a buyer’s market, with a figure significantly lower indicating a sellers market.

Whilst the predominant sentiment across the country is still to it being a buyer’s market; at this time 6 of the 19 regions are this month moving towards a more balanced market, with the Nelson region clearly bucking the trend with a bias to a seller’s market with inventory below the LTA, sales activity strong and asking price expectation steady.

Lifestyle Property

The steady flow of new listings of lifestyle properties appears to have stalled in June. Having seen 4 straight months with a similar level of c.1,100 listings the new volume of listings in June dropped by 18% to 945. A key contributor to this decline was the Auckland region where a 44% month-on-month decline was seen with just 195 lifestyle listings in the month. Matched to this was Canterbury region with a 32% decline from 147 to 100.

The asking price expectation of these listings though remains strong with an increase (month-on-month) of 14% to $573,893, however the sector does experience variance in asking price due to the sample set and diversity of properties.

Apartments

The number of new apartments coming onto the market in June remained pretty much in line with May with a total of 562 in the month. This represented an 18% year-on-year growth. Looking at the long term trend, the last 12 months has seen a 24% increase as compared to the prior period with the Auckland region as the largest market recording a 26% increase on a 12 month moving average basis.

The truncated mean asking price for the month was $367,216 which was down 5% on the most recent 3 month average and down 15% as compared to June last year. The Auckland region showed an asking price expectation of $331,958, down 6% on the recent 3 month average and 11% down on June last year.

Property Price Index

Comparing absolute house price sale data to listing price expectation is not a like-for-like comparison, however the alignment of trends can be useful as detailed 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 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 1,160 licensed real estate offices across NZ, representing more than 94% 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 11,106 new listings in the month of June, a total of 160 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 350,000 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 over 5,000 listings for all types of farms and agricultural land as well as over 11,o00 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 26,000 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 4,000 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 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 1,160 offices, the company represents over 94% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for June 2010 can be downloaded here (1.4MB 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 July 2010 will be published on this website on Sunday 1st August 2010 at 10am.

NZ Property Market Pulse – June 2010

Posted on: June 24th, 2010 | Filed in Featured, Property Pulse - Regional Market Report, Regional News

Assessing the state of the property market can be as daunting as finding that perfect house. There is a multiplicity of reports appearing all the time, all sharing insight into where the market is headed. We would like to provide on a monthly basis – not a new report, but a digest of what we here at Realestate.co.nz are the key numbers to follow.

The property market is like any other type of market, there are buyers and sellers, there is available stock and there are sales number and also the ever critical sale price. These are the key numbers we think are critical to follow. Each month we will highlight by region and nationally these key numbers and the picture they are showing.

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.

Commentary:

Sales in May amounted to 5,206 down just a single house as compared to April. As viewed on a seasonally adjusted basis the number of sales turned around having seen a consistent growth from the start of the year, reasons behind this could certainly be influenced around uncertainty surrounding the May budget and future interest rate expectation.

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.

Commentary:

The stratified price fell in May down from the April figure of $366,925 to the May figure of $361,600 taking prices back to the same level at the start of the year. This clearly shows the market is tight with little immediate pressure on price as sales volumes remain subdued.

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.

Commentary:

The level of new listings in May fell, sending the stock of property on the market down from the peak of 52 weeks in April – that was equating to a full years worth of sales on the market. The current level for May at 47 weeks is still high by historical standards. 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

South Island

Winter property market opens up opportunities

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

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

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

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

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

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

Announcing the arrival of aspiring new real estate agents

Posted on: June 17th, 2010 | Filed in Agent Tips, Featured, Real Estate Industry

Have you ever wondered what would happen at a wedding if the celebrant / minister when uttering the words (Does anyone know any just cause..?) actually had someone leap up from the back row screaming “I DO“!!

There is that momentary hesitation which is then quickly exhausted as silence pervades the audience gathered together for the happy day, and the service resumes as normal.

So what has this to do with real estate? – well let me explain.

Has anyone noticed that the newspapers have suddenly started carrying a large number of adverts in the Public Notices section from aspiring real estate professionals seeking to publicly proclaim their intention to take up a career in real estate. They are proclaiming in effect “Does anyone know just cause … as to why I should not be regarded as suitable to hold the position (license) of a real estate agent / salesperson”?

The key question I am keen to ask is – does anyone read these notices ? The fact is there is a legal requirement under the regulations set out in the Real Estate Agents Act 2008 for any person wishing to enter this profession to place an advert in one of an approved set of newspapers, in fact the requirement is to place 2 adverts.

What purpose does this process serve ? – certainly in today’s world of shrinking newspaper readership it is almost impossible for it to be seen as a viable means of allowing the general public to make a challenge to someones application to hold a license. There could be a better argument that the process would be better served by featuring a list of prospective applicants on the Real Estate Agents Authority (REAA) website or on the industry website. At least this approach would be in the knowledge that visitors would have context to the issue. In addition given this context a Google search for the term “Applicants for new real estate license in NZ” could then provide a link to such a list (a detail search on the current results show not one reference to any applicant or newspaper notice).

The sole beneficiary of this approach appears to be the newspapers who in the case of the major metropolitan dailies are charging around $500 for the privilege. This is the potential for a cool extra $1m for the newspapers given a typical flow of new entrants into this industry each year. This on top of the $555.75 levied by the REAA for a new application for a license and the fees for the education standards required to apply for a license (c. $1,000+) certainly has raised the financial barriers to entry into the industry.

Architecturally designed or designed by an architect

Posted on: June 11th, 2010 | Filed in Agent Tips, Architecture & Construction, Featured, Online marketing

In the world of real estate marketing, as with any form of marketing creating standout is critical so as to generate awareness and interest. When it comes to homes, the design style is so important and this is often what is highlighted by real estate agents in the marketing description.

However as is ever the case with all marketing – accuracy is key and this is why I am happy to post this open letter from the Chief Executive of the NZ Registered Architects Board – Paul Jackman who naturally has a concern to ensure that in describing homes for sale as “architecturally designed” or “designed by an architect”, that they are just that.

I took the time to review some of the over 600 listings on the site today that include the keyword “architect” in the description – the vast majority do reference the name of the architect in question or in some cases use the word in contextual description, ie “bring along your architect” or “sits amongst architectural homes in the area”. That having been said the important note of Paul’s letter which was published recently in the Real Estate Institutes monthly member magazine is key – an architect is a professionally qualified individual who is bound by professional standards and this is at the heart of the professional industry, to have the term “architect” misused is of concern to the profession.

Was the architect an architect?

Every profession lives or dies by its reputation. If the public perceives a profession to be honest, they assume its members can be trusted. This confers huge benefits when doing business. But if a profession is perceived as dishonest, every member of that profession pays a price in lost business.

For a long time now architects have been deeply frustrated by real estate advertisements claiming that properties for sale were designed by a named architect when actually the person named is not an architect at all. These advertisements potentially deceive buyers, given that a house designed by an architect may carry a price premium. Typically puffery is used like, to quote a real case, “Immaculately detailed, the house was designed by renowned Christchurch architect Ray Hawthorne.” Mr Hawthorne may be renowned, but he is not an architect.

Only about 5 per cent of New Zealand’s residential properties are designed by architects. The rest are designed by others, sometimes called architectural designers, who either are trained in drafting or self taught.

In some cases the vendor is deluded about his or her house. The vendor thinks the house must have been designed by an architect because it has some unusual features or looks funky. The real estate agent is told this and blithely places the advertisement. In some other cases the real estate agent may be just trying to talk up the price.

Either way, this will not do. The Real Estate Agents Professional Conduct and Client Care says (6.4) A licensee must not mislead a customer or client, nor provide false information.

Also, under the Registered Architects Act 2005 it is an offence for anyone to claim to be an architect who designs buildings unless he or she is registered. Only architects are entitled to use that title. A person pretending to be an architect can be fined up to $10,000.

Real estate agents need to check before placing advertising claiming that a named person is an architect. This can be done in seconds via the online New Zealand Architects Register at www.nzrab.org.nz. A search facility allows you to enter any name and then find out if that person is registered in New Zealand. There’s also a listing of former architects, incase the person who designed the house is retired or deceased.

Real estate agents should take this seriously. The NZRAB has laid complaints with the Advertising Standards Authority and the Commerce Commission. At the time of writing, the Real Estate Agents Authority was also investigating a breach and further complaints will be laid whenever more breaches are detected.

Architects work hard to gain their professional recognition, and so naturally they get grumpy when others try to cash in on that. Also, they fret when houses of, as they see it, dubious merit are falsely credited to their profession. Architects are asking real estate agents to show the same care as one would expect from any professional group.

Paul Jackman

CE New Zealand Registered Architects Board

NZ Property Report – May 2010

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

The fall in the asking price expectation of new listings coming onto the market in May (from $422,520 in April to $407,349 in May) would seem to indicate that the state of the market is driving a behaviour amongst new sellers to price property to meet-the-market. That is to say in this case given the high levels of inventory of unsold homes matched to sluggish property sales, something has to give and price is what has been adjusted. The sales figure for April from REINZ was 5,207 as compared to April 2009 at 6,210. This means that to achieve a secure sale in today’s market requires sellers to price at a competitive level relative to other similar properties on the market.

These statistics are detailed in the latest NZ Property Report for May 2010, published here and available as a downloadable report to print or distribute.

It is worth highlighting at this point that there is no evidence within the daily data of new listings coming onto the market that the asking price has been affected by any move as a result of the budget of May 20th. In fact new listings slowed considerably in the last week of the month and the truncated mean asking price of those listings was not significantly different from earlier in the month.

This report for May has a revised set of data for inventory. Following feedback from economists, the inventory data which is derived from the stock of unsold houses divided by the 3 month moving average sales figures from the Real Estate Institute has been adjusted to now reflect seasonally adjusted sales. This will ensure that inventory as measured in equivalent weeks-of-sales is now itself seasonally adjusted to better track the level of unsold homes on the market. All historical data in this report has been recalculated to reflect this change.

Asking Price

Property price expectations of new listings coming onto the market fell by 4% in the month of May as compared to April. Asking price has been volatile over the past 6 months which has also typified a quieter period of sales in the market; however since early 2009 asking price expectation has been trending upward.

As compared to May 2009 the price was up marginally by 1.5%, however the truncated mean price is still some 5% below the peak of the market back in October 2007.

New Listings

The volume of new listings coming onto the market fell again in May to 11,733 – down 4% from April, however the figure is up 17% as compared to the same period last year.

Whilst the month-on-month decline is consistent across the regions; underlying the national figures is a higher increase (year on year) in new listings in the 3 key metro markets.

Inventory

The level of unsold houses on the market at the end of May totaled 51,980.This represented the equivalent of 46.9 weeks, as assessed on a seasonally adjusted basis.

The inventory of unsold homes had been rising steadily over the past 11 months, however for the first time the trend has halted. A key contributor to this has been the slowing in the pace of new listings coming onto the market, especially as property sales still remain sluggish.

Regional Summary – Asking Price Expectations

After a 3 month period through the summer and autumn when asking prices remained stubbornly fixed at the c.$420,000 level whilst inventory crept up and sales remained sluggish; the asking price has fallen by a significant level in May.

Of the 19 regions, 7 did show asking price increases, although these were outside the 3 main centres of which Auckland set the mood with a 2.5% fall in asking price as compared to the recent 3 month period. The increases of price in Wairarapa and West Coast should be taken cautiously as they are two of the smaller regions in terms of volumes of new listings. The significant falls in the regions of Northland, Coromandel and Nelson could reflect the seasonal changes with holiday accommodation changes at the end of summer, and in fact are reflective of similar falls this time last year.

Regional Summary – New Listings

Across the 19 regions of the country, listings showed significant increases in 7 areas with a further 4 posting double digit year-on-year growth. The main metro centres of Auckland, Wellington and Canterbury all showed significant year-on-year increase. This is many ways more of a refection that a year ago the market was showing a resurgence as existing stock was being snapped up by bargain hunters, as falling prices had stimulated the market. This year no such activity has been seen.

There were some significant falls in new listings coming onto the market across the regions, mainly in provincial areas where certainly property sales have been more sluggish and where sellers may have been reluctant to enter the market.

Regional Summary – Inventory

The prevailing sentiment from the level of inventory of unsold houses remains clearly in the camp of property buyers having the upper hand in the market. Of the 19 regions just 3 showed any balance in the market, with only the Central Otago Lakes posting an inventory level lower than the long term average, indicating a slight shift to sellers being in the box seat in this region.

The data for May as with all data for inventory as noted previously has been adjusted to reflect seasonally adjusted sales which has removed some of the volatility extremes of inventory, and better represented true inventory.

Despite the clear view that the property market is currently firmly in the camp of a buyers markets as it has been for a number of months; there are regions of the country which with prevailing conditions remaining, will likely see a shift out of their market focus in the coming months. Of those regions the main ones will be Wellington and Taranaki, which are close to being a more balanced market with neither sellers nor buyers having the upper hand.

Lifestyle Property

A total of 1,146 new listings of lifestyle properties came onto the market in May. This is the fourth month with listings in excess of 1,100, all of which have represented strong year-on-year growth in listings.

The truncated mean asking price has though over the same period fallen significantly from a peak of $601,000 in January to the May figure of $504,557. This figure for May represents a 13% fall comparing the month to May 2009 and a 9% fall as compared to the recent 3 month average.

Within the total, the Auckland region featured strongly with 345 new listings up 64% on May 2009 with an asking price expectation exactly in line with the prior 3 months and prior year at $871,091.

Apartments

The number of new apartments fell again with just 560 coming onto the market in May. This however represents an 18% year-on-year increase, taking the levels back to 2008 market levels.

The truncated mean asking price was down 4% on the prior 3 months at $377,893 and down 5% as compared to May 2009.

As ever the Auckland market dominates the figures with a total of 367 new apartment listings coming onto the market, up 20% on May last year with an asking price expectation of $344,541 down 5% on prior 3 months and down 2% compared to last year.

Property Price Index

Comparing absolute house price sale data to listing price expectation is not a like-for-like comparison, however the alignment of trends can be useful as detailed 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 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 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

In analysing the details of the 11,733 new listings in the month of May, a total of 405 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 of the real estate industry of New Zealand, it is an industry owned website providing online marketing services to the real estate industry. The shareholders in the website comprise the REINZ (50%) and six of the largest real estate companies (50%). The website is the most comprehensive website for real estate in NZ, currently hosting over 120,000 listings, covering 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 1,160 offices, the website features over 94% of all listings from licensed real estate agents in NZ. Realestate.co.nz was visited by over 401,000 unique browsers in the month of April from both domestic and international visitors. The website is the most popular website for international visitors enquiring of NZ real estate, with over 124,000 unique browsers in the month of April from more than 200 countries.

The full NZ Property Report for May 2010 can be downloaded here (1.4MB 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 June 2010 will be published on this website on Thursday 1st July 2010 at 10am.

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Archive for the ‘Featured’ Category

Summary of the market – June 2010

Asking Price

New Listings

Inventory

Regional Summary – Asking Price Expectations

Regional Summary – New Listings

Regional Summary – Inventory

Lifestyle Property

Apartments

Property Price Index

Notes:

Property Sales

Property Price

Stock of Property

Was the architect an architect?

Asking Price

New Listings

Inventory

Regional Summary – Asking Price Expectations

Regional Summary – New Listings

Regional Summary – Inventory

Lifestyle Property

Apartments

Property Price Index

Notes:

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