The October 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 October. 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 October 2010 report follows a similar story to that of the past 3 months as the market has moved into what is traditionally a strong spring listings peak. As with sales the level of new listings continues to be well down on 2009 levels as well as slightly down on 2008 levels – a time when recession and global volatility inn credit upper most in consumers minds. The overriding issue in the market is the level of unsold houses which continues to offer buyers choice but is challenging for sellers competing with so many alternative properties. The theoretical impasse to this situation would normally be a weakening of prices, this is certainly not shown by the latest month’s expectation of asking price which rose again.
A full print version of the NZ Property Report – October 2010 is published below and is available for download (1.3MB) and distribution.
Summary of the market – October 2010
The month of October is traditionally the 4th highest listings month – a key time as sellers, keen to capture the start of summer list knowing that the run up to Christmas is sufficient to ensure a transaction close before the year-end. This year that peak has been somewhat subdued. Total listings at 11,911 even allowing for the factor of continuing weakness in the Canterbury region was down significantly on last year (12% down) and on a seasonally adjusted basis 1% down indicating that the scale of the seasonal uplift was equally subdued.
The key factor in the market continues to be the level of sales which is the reason for the significant high levels of unsold houses on the market which is now edging ever closer to a full 12 months worth. Sales over the past 4 months have been stuck within a very tight range of 4,300 to 4,400 with no appreciable seasonal movement. These sales levels are very comparable with the same period in 2008 when this situation went on for over 10 months until the market saw activity as prices eased and inventory was cleared.
In terms of asking price expectation, sellers are certainly indicating that their view is that property prices do not need to adjust, rather the opposite having seen a further rise in asking price in October from $411,745 to $420,451 which is a significant monthly rise – 4% increase on the recent 3 month moving average and up 0.4% as against October 2009.
The truncated mean asking price for all new listings in October was $420,451, this compares to $411,745 last month and $418,759 in Oct 2009. The market tends to see asking price rise in the spring accompanying the rise in listings. The key issue is that with the high levels of inventory the strength in asking price is counter to the market trend which was seen in 2008 when prices softened.
The current asking price is now closer than ever (just 2% behind) the peak of the market back in October 2007.
Seen over a longer time period the total new listings in each of the past 3 years for the first 10 months were 140,742 in 2008, 111,210 in 2009 and 116,933 in 2010. This provides an insight into the change in the scale of the property market over the past 3 years.
The continued subdued level of sales is holding inventory at such high levels despite this slower level of new listings, thereby adding to pressure on the market.
Regional Summary – Asking price expectations
The majority of the 19 regions showed overall increases with 8 showing increases of more than 5% as compared to recent 3 month average.
Particularly large growth in asking price expectation was seen in Wellington where the truncated mean asking price rose 5% to a new peak of $455,422 surpassing the prior peak in Nov 2007.
Just 4 regions showed a fall as compared to the recent average with both Gisborne and Otago posting falls of 5% or more.
Regional Summary – Listings
The regional perspective with regard to new listings in October shows some variations with still the majority of regions showing a year on year decline indicating the potential for these markets to be deficient in new listings and therefore potentially leading to a seller’s market.
Notable regions showing significant declines in new listings are Waikato, Coromandel and Bay of Plenty – however all 3 of these regions though are seeing very high levels of unsold houses.
The main metro centres of Auckland and Wellington show falls of 12% in Auckland and just 2% in Wellington. The impact of the Canterbury earthquake continues to impact the property market there with new listings down 26% an identical level to last month in some ways reflecting the fact that whilst significantly impacted, the situation has not worsened with 1,312 new listings in the region over the past month.
Regional Summary – Inventory
It is very clear from the regional map of inventory levels that the property market continues to favour buyers when viewed purely from the perspective of the rate of sale as compared to the level of unsold houses on the market.
Some of these levels across the country are approaching or has reached new highs. In the month of October 4 regions posted new highs: Coromandel at 325 weeks, Northland at 181 weeks, Marlborough with 87 weeks and Waikato with 67 weeks.
Set against those significant highs are the only 2 regions which are showing levels below long term average – the West Coast of the South Island and Gisborne.
The main centres of Auckland and Wellington has levels slightly above average with Wellington showing this month a significant rise to 26 weeks. The Canterbury region has risen significantly this month primarily as a function of the very low sales reporting in September as a function of the disruptive impact of the earthquake at the start of the month.
The level of new lifestyle listings grew again in October following strong growth in August and September. On a seasonally adjusted basis the total of 1,110 listings represented a 3% growth, as compared to October 2009 actual listings are down 4.3%.
The truncated mean asking price for the new listings in October was up 11% from September to $584,912. This also represents an 8.3% increase in asking price compared to the recent 3 month moving average.
A total of 509 apartments were listed in October. The last 3 months has seen almost identical levels which reflects in a 7.5% seasonally adjusted decline and a 21.8% year on year decline. The truncated mean asking price fell to $356,306 in October from $362,427 in September. This level is down 5.4% as compared to October 2009. It is also the lowest price since the peak of the market at $460,734 way back in December 2007.
In the Auckland market total listings amounted to 310 down 27.1% as compared to a year ago and down 23.5% on a seasonally adjusted basis. Asking price expectation also fell from $321,845 in September to $317,283 in October, this represented a 10.6% fall from October 2009 and a down 0.9% as compared to the recent 3 month moving average.
Property Price Index
Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison, however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:
Index comparison 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.
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.
With the largest database of properties for sale in NZ, realestate.co.nz is uniquely placed to immediately identify any changes in the marketplace. The realestate.co.nz NZ Property Report is compiled from new listings coming onto the market from the more than 1,130 licensed real estate offices across NZ, representing more than 95% of all offices.
With an average monthly level of over 10,000 new listings, the realestate.co.nz NZ Property Report provides the largest monthly sample report on the residential property market, as well as a more timely view of the property market than any other property report. The data is collated and analysed at the close of each month, and the Report is compiled for the 1st day of the following month. This provides a feedback mechanism as to the immediate state of the market, well in advance of sales statistics which by the very nature of the selling process can reflect activity with a lag of between 2 and 4 months.
In analysing the details of the 11,911 new listings in the month of October a total of 153 listings have been excluded due to anomalies. The categorisation of Lifestyle property is defined by the land area of the property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.
Background to Realestate.co.nz
Realestate.co.nz is the official website company of the real estate industry of New Zealand, it is an industry owned web business providing online marketing services to the real estate industry. The shareholders in the business comprise the REINZ (50%) and six of the largest real estate companies (50%).
The business operates a portfolio of websites all focused to specialist sectors of the real estate market:
Realestate.co.nz is the heart of the business and is focused to the residential property market. It features the most comprehensive selection of property for sale and rent across NZ. The website attracts a significant monthly audience of over 400,000 unique browsers, with over 110,000 of those visiting from countries outside of NZ.
nzFarms is a specialist website presenting the most comprehensive selection of farms and agricultural businesses on the market across NZ. At this time it features around 5,000 listings for all types of farms and agricultural land as well as over 11,000 lifestyle properties.
Prime Commercial is a specialist website presenting the most comprehensive selection of commercial property for purchase or lease on the market across NZ. At this time it features over 27,000 listings for all types of properties – retail, commercial, industrial and investment properties.
Prime Business is a specialist website presenting the most comprehensive selection of businesses for sale on the market across NZ. At this time it features over 4,300 listings for all types of businesses – retail, tourism, wholesale as well as franchise opportunities.
Zoodle is a specialist property information website providing very detailed data on all residential properties in NZ. The database comprises over 1.5m properties with detailed specifications, map and local amenities. The site provides online reports for free and for purchase covering valuation and legal information to greatly assist the needs of property buyers and sellers.
The web business of Realestate.co.nz site is the most comprehensive real estate web operation in NZ, currently hosting over 118,000 listings, covering this portfolio of residential property for sale and rent, commercial property for sale and lease, rural properties and farms, as well as businesses for sale. With a subscriber base of over 1,130 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.
The full NZ Property Report for October 2010 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 November 2010 will be published on this website on Wednesday 1st December 2010 at 10am.