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Archive for the ‘Featured’ Category

10

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

13

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.

2

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:

11

New Year brings new business models for real estate

Posted on: February 8th, 2011 | Filed in Featured, Online marketing, Real Estate Industry News

It is often said that the best time to launch a new company is in the depths of a recession. To survive in the midst of such adversity should surely provide a proof of the potential when and if the recovery comes, and the economy begins again to fire on all cylinders.

Well, we are from all accounts climbing; albeit slow out of recession across the general economy. The real estate market though is still not as yet firing on all cylinders. Sales in 2010 were barely above the all time low of 56,071 in 2008 at just 56,303.

When compared to the 5 year period of 2003 to 2007 when the average total year sales were just under 107,000 it is very clear to see how slow the property market has become in recent years. Even during the recession of the Asian Crisis of 1997/8 the average sales volumes during those years was over 80,000.

So despite this slow market it is therefore not surprising to see some new companies emerging in the real estate market. With these new companies comes some new approaches which clearly are trying to define a new business model to attract what is still a significant business.

The real estate industry in the residential sector alone accounted for total transacted sales of just under $25 billion in the last year. With an average commission of around 3.5% that adds us to close to $850 million in fees earned by the industry per annum in the depth of the property market recession. In the height of the market the figure reached over $1.4 billion.

Such revenue opportunity supports a large industry of over 11,000 sales agents working out of a total of close to 1,100 offices around the country.

These new entrants to the market that have emerged over the past couple of months share a two key things in common:

1. They focus on online marketing

2. They offer a lower fee for selling a property

The two most recent companies to highlight are 200Square and The Property Market. Additionally it has recently been speculated that Mike Pero may be looking to enter the property market. It is interesting but not surprising that the proposed concepts is also a solution based on a lower fee structure combined with a focus on online marketing.

NZ Real Estate  - new business models for 2011Late last year details emerged of an Australian company Refund Real Estate looking to enter the market with a rebate scheme of fees and a focus towards online marketing.

This focus online is logical. As has been detailed in the blog previously the focus of property buyers and sellers is to use the web first and foremost for searching and researching property. This focus online in the home or the office is now fast being complemented by the evolution of the mobile real estate applications. At this stage with the Realestate.co.nz iPhone app which is gaining significant traction and usage, with over 14,000 downloads and well over 1,500 daily users. So for smart new companies to advocate the priority to online marketing is both logical and appealing as in so doing they not only save their clients significant amounts of money compared to print advertising, but also provide great analysis of lead generation.

The other aspect of these new companies, being the low fee offering as compared to the established operators. Certainly the consumer appeal of paying a flat fee or a lower percentage is undoubtedly strong, the key question will be as to the ability of these companies to make the business model work. There have been those who have tried and succeeded with a low fee structure, uniquely in the Christchurch market with Diane Astle and Premier Real Estate both offering a 1% fee service. Equally there have been those who have tried and failed, most notably The Jones.

What is certain is that the web marketing advocated by these new companies is pointing the way to the future for this industry, with it comes cost savings for vendors as compared to print media. As for the fees for professional services of real estate agents – the judgment will ultimately be made by the consumer who will trust in agents that deliver true value whether that will be in a low fee, or a full fee structure will be interesting to see and well worth watching as the year progresses.

5

NZ Property Report – January 2011

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

blue pen and small houseThe January 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 January. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

The January 2011 report shows a new record low level of new listings coming onto the market. This was matched with a significant drop in asking price expectation. Whilst the level of new listings would normally push the market in favour of sellers given the dearth of new listings, the significant level of unsold property still on the market presents an opportunity for buyers.

The market as it enters the key summer period is opening up some opportunities with vendors considering putting their house on the market able to take advantage of an uncluttered position in the portfolio of new listings, ready able to attract the buyers that are out there. Existing property owners who have a property for sale as part of the current unsold inventory may need to review their asking price expectations as the new listings may be more reflective of the market today.

Buyers have a varied and diverse selection of property to review before making buying decisions with 48 weeks of inventory of unsold houses presenting a level considerably above the long term average of 40 weeks.

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

Summary of the market – January 2011

NZ_Property_Report_cover_page_Jan_2011_Realestate.co.nzThe first month of the year is traditionally a quiet period with significantly less business days and therefore listings coming onto the market tend to be subdued. The level of new listings for January 2011 is significantly low as compared to long term averages. Back at the start of 2008 as the Global Financial Crisis was just starting and the property market was turning down, a total of 26,097 new listings came onto the market in the combined months of December 2007 and January 2008; a year later as the market abruptly slowed the number in Dec/Jan had fallen to19,313. In 2009/2010 a year ago, there had been a degree of pick up to 20,621. This year over the same period the total is 17,224.

The market situation is unusual. Such low level of listings would normally reflect in a tight market where sellers would have the upper hand; however the scale of the unsold inventory, matched to still relatively low levels of sales, means that buyers have a great selection to research and a strong buyer advantage. It strangely would seem to be a market where the needs of buyers and sellers can be met. New listings tend to attract most interest in a property market and with such a recent shortage; new listings in the coming months will likely attract buyer interest. Recent new vendors with new listings are setting realistic price expectations as shown by the truncated mean asking price down to $406,525 this month.

Set against these statistics is the news that in terms of buyer interest online it could not be more active. As measured by Nielsen Online January saw over 2,000,000 browser visits to all the real estate websites in NZ, up 25% from 2010.

Asking Price

Asking_price_chart_Jan_2011_NZ_Property_Report_Realestate.co.nzThe truncated mean asking price for all new listings coming onto the market in January fell by over $9,000 from $415,750 to $406,525. On a seasonally adjusted basis the asking price remained unchanged from December at $416,666. There is traditionally a fall in asking price in January.

The current asking price slipped further from the peak of asking price back in October 2007, it is currently off 5.2%.

New Listings

New_listings_chart_Jan_2011_NZ_Property_Report_Realestate.co.nzTraditionally January is a weak month as it is a short business month; however the fall from the record low of new listing in December is significant. Just 8,300 new listings compares to 10,272 a year ago and 9,942 in January 2009.

On a moving annual basis the past 12 months have seen 136,817 new listings, just up on the 135,746 in the prior 12 month period, an increase of just 0.8%.

Inventory

Inventory_chart_of_unsold_properties_Jan_2011_NZThe level of unsold houses on the market at the end of January rose slightly to 53,297 from 53,077 in December. This represented the equivalent of 47.9 weeks of equivalent sales, as assessed on a seasonally adjusted basis.

The inventory of unsold houses remains high in absolute terms as the sales activity impact is not being felt, even allowing for the significant lower level of new listings.

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

Regional Summary – Asking price expectations

Asking_price_regional_map_Jan_2011_NZ_Property_Report_Realestate.co.nzThe very clear message from the chart below showing all of the 19 regions is that the asking price expectation of sellers with new listings right around the country is that asking prices are slipping lower. Nationally asking prices are down 2.7% as compared to the recent 3 month average. The only regions bucking the trend are the three east coast regions of Coromandel, Bay of Plenty and Gisborne, together with Southland.

Significant slippage in asking prices are being seen in 5 regions – Waikato, Central North Island, Queenstown Lakes, Otago and the largest fall of 8.4% in the Hawkes Bay. The three main metropolitan regions of Auckland, Wellington and Canterbury are all showing weaker asking prices of between 3% and 4%.

Regional Summary – Listings

New_listings_regional_map_Jan_2011_NZ_Property_Report_Realestate.co.nzThe national low record level of new listings for January was reflected right across the country with all but 2 of the 19 regions showing new listings down as compared to January 2010.

There were 7 regions reporting a record low of listings – Waikato and the Bay of Plenty, Central North Island and Manawatu / Wanganui. Then in the South Island, Otago, Canterbury and the Central Otago Queenstown Lakes district.

Such low levels of listings pushes the market into a situation with a shortage of new properties to attract buyer, for despite the high inventory levels the attraction of new listings remain the lifeblood of the industry.

Regional Summary – Inventory

Inventory_regional_map_of_unsold_properties_Jan_2011_NZ_Property_Report_Realestate.co.nzThe inventory of unsold property on the market continues to ease since the latest peak in November last year when the inventory stood at 53.2 weeks of equivalent sales. It has now fallen to 47.9 weeks. Whilst this is a continuing trend of easing, the level of inventory remains stubbornly above the level at the same time last year and the long term average.

This level of inventory leads to an assessment of the market being a buyer’s market; however the shortage of new listings is lessening this effect given the dearth of new properties to attract such buyers.

Set against this overall high level of inventory there are key markets where inventory levels are pretty much now at long term averages – Auckland and Wellington as 2 key markets are fairly balances and the Central North Island is now below long term average establishing this region as being in a seller’s market situation.

Lifestyle

New_listings_of_lifestyle_property_chart_Jan_2011_NZ_Property_Report_Realestate.co.nzLifestyle property listings fell significantly in January. At 727 new listings, the month represented a new record low. As compared to January last year the level of new listings is down 22%.

The asking price expectation for the new listings was up slightly at $540,825 from $537,368 in December. This represents a 3.2% decline as compared to January last year and a 3.5% decline in asking price as compared to the recent 3 month average.

Apartments

New_listings_of_apartments_Jan_2011_NZ_Propertry_Report_Realestate.co.nzJanuary new listings of apartments came close to beating the prior low record of 352 in January 2009. For January just 363 new apartment listings came onto the market. This represents a 16% year on year decline. The asking price expectation for apartments remains low with a figure of $362,041 in January down 8.3% as compared to the recent 3 month average and only just up on the record low of $356,306 in October 2010.

In Auckland just 238 new apartment listings came onto the market which represented a 5.2% year on year decline. The asking price for Auckland apartments in the month was $342,250 which was 7% down on the recent 3 month average, but identical to the asking price expectation of a year ago.

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:

Price_Index_Jan_2011_NZ_Property_Report_Realestate.co.nzRealestate.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 1,050 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 8,300 new listings in the month of January a total of 81 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 1.5m 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 1,050 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

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

8

Google exits map based property search service

Posted on: January 28th, 2011 | Filed in Featured, mobile, Technology, Website searching

google map search for real estate - Google SearchGoogle announced yesterday that it was ceasing the operation of its map based real estate search service. This service was introduced back in July 2009 as a complementary enhancement to their standard text search whereby listings for property for sale or rent were mapped based on addresses, supplied with listings by real estate agents and real estate websites (Realestate.co.nz fed content to Google for this service).

This is a significant decision by the world’s largest search engine.

In their official announcement they state that one of the factors in their decision was “the proliferation of excellent property-search tools on real estate websites“. They went on to say “We recognize that there might be better, more effective ways to help people find local real estate information than the current feature makes possible”.

Whilst I in no way doubt that the reasons they state are a true reflection of the circumstances that led then to this decision, I think there are other factors to consider.

I was always of the opinion that Google came at real estate search almost accidentally, especially in the early days. The concept was originated in Australia through the maps team under the leadership of the Lars Rasmussen. Their desire was to demonstrate their mastery of the mapping platform and locating property for sale and rent on these maps was appealing as data was readily available, with agents only too happy to collaborate (or put another way – the owner of the data would not object). The fundamental problem though, is that whilst mapping property is interesting and no doubt of value, it is not the intuitive first entry point of real estate search for buyers on the web.

Boutiques.com - Shop boutiques curated by style icons and you - Designer Shoes, Dresses, Handbags

The solution Google should have developed, in my opinion would have been using their image search platform. The primary consumer real estate search experience is really visual – rich imagery of properties for sale is so compelling. The map representation would have then been a natural complement to an image based search. In some ways Google recent foray with Boutiques demonstrated the true concept of a better approach to the real estate sector.

Another aspect of concern to Google could have been the view that an open free service for listing property opens up the potential for spammers to damage the user experience. Ed Freyfogle of Nestoria, who as an ex-Yahoo search expert is well positioned to comment, proposed this view that “The free model as demonstrated by Google means you’ll be spammed, get expired and fake listings, which are bad for users. And because you’re not earning any money, it’s hard to justify investing in the service”. There is no evidence that this did occur in NZ, but it was potentially a problem.

The existing specialist real estate websites like Realestate.co.nz that only accepts legitimate listings actively marketed by licensed real estate agents ensures that this eventuality cannot arise. A subscription fee model charged to real estate agents ensures the integrity of the content.

As to why Google will cease to provide this service. I suspect that the quoted reason being the changed structure of the Google Base to Google shopping data schema is the true reason – Google are a very highly advanced grouping of technologists.

In NZ the level of traffic from Google maps real estate search never eventuated to much. Realestate.co.nz fed 100% of content from day one and over the 19 months we received 220,000 session visits to Realestate.co.nz from the maps search – that is only 11,500 per month as compared to our total traffic being around 900,000 session visits per month. Consumers never easily found Google real estate map search, or even if they did, did not see it as that valuable.

Referring Sites - Google Analytics

The most likely people who did use it were real estate agents, who used it to better appreciate the total marketplace in their area. That is where it was of most value.iPhone map result example

The bottom line is that there is a significant place for mapping real estate listings – it is truly relevant in the context of mobile. When you are standing on a street corner, then a map representation of property near you for sale or rent is very compelling on your handheld mobile device – welcome to the smartphone apps from real estate portals!

Try it for yourself on the new Realestate.co.nz iPhone app.

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