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NZ Property Report – June 2012

Posted on: July 1st, 2012 | Filed in Featured, NZ Property Report

The June 2012 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 96% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – June 2012 is published below and is available for download (1.2MB) and distribution.

Summary of the market – June 2012

It seems that just as we sensed a stabilizing of the property market in terms of new listings responding to the growing demand as was witnessed in May, the market has swung again and the ever present property shortage just got worse. Worse by not just a small measure! – the current level of inventory is down to the lowest witnessed in 4 years. Across the country there are no regions for which the state of the market could be assessed as even a slight buyers’ market.

This situation has arisen as a consequence of very strong sales in May – the seasonally adjusted total of 6,154 was up 26% on April. In total the first 5 months of this year show sales up 25%. At the same time listings over the same period are only up 9%. To put this into perspective the number of properties on the market across the country at this time is 43,691. If the rate of sale was to continue and no new listings were to be added that stock would be sold out by the last day of December this year. A year ago there were 47,738 properties on the market, at that time the then rate of sales would have meant that it would have taken until the middle of March next year to sell out all that stock.

The months of June, July and August are proportionally the lowest of the year both in absolute terms but also in relation to sales. This 3 month period represents 22.4% of the total listings for the year as opposed to 24% of the sales for the year. If this traditional seasonal situation is experienced this year and the rate of sale continues at current levels it is likely that the NZ property market will reach critically low inventory in absolute terms as the market moves into the key spring season in just 2 months’ time.

Asking Price

The seasonally adjusted truncated mean asking price for listings in June eased from the record high of $435,887 set in May to a June level of $424,315. The month-on-month decrease of 2.7% takes the month level to 1.6% up on June last year. As can be seen from the chart the easing in the month does not significantly affect the trend line which continues to show a steady rise over the past 18 months.

New Listings

The level of new listings coming onto the market in June fell back to 9,689 from 11,544 in May. This represents a seasonally adjusted fall of 8% demonstrating that the sellers are still apprehensive of listing their properties despite the record low inventory.

On a 12 month moving average basis a total of 130,289 new listings have come onto the market since July 2011 as compared to 125,848 in the prior 12 month period, a rise of just 3.5%.

Inventory

The level of unsold houses on the market at the end of June (44,787) was down as compared to May (46,016) as measured on a seasonally adjusted basis. The inventory as measured in terms of equivalent weeks of sales shows a significant drop from 35.7 last month to 29.8 weeks this month. This is one of the largest single month drops since the peak of the market for inventory in October 2010.

Regional Summary – Asking price expectations

The national (seasonally adjusted) truncated mean asking price expectation among sellers eased slightly in June by 2.7% to $424,315.

Across the 19 regions of the country the asking prices generally eased which considering the low inventory across the regions is seen as somewhat surprising. The biggest falls were seen in Taranaki, Northland and the Central Otago / Queenstown lakes area – all falls of 10% or greater on a seasonally adjusted basis. In total there were 11 regions reporting falls in asking price on a seasonally adjusted basis, with just 8 showing increases.

The largest regional increase was seen in Gisborne; a region which does witness volatility as a function of scale. Most notable region reporting an increase was Canterbury which showed a 1.6% seasonally adjusted increase to set a new record level of asking price expectation off the back of a record low level of inventory.

Regional Summary – Listings

Listings volumes in June were light with a 6% year-on-year increase nationally and across the regions the majority showed modest gains.

The regions showing the tightest level of inventory – Auckland and Canterbury showed increases in new listings, however at 11% and 4% increase respectively these levels fail to alleviate the very low inventory.

Three regions – Taranaki, Manawatu / Wanganui and Wiararapa did see strong growth on a year-on-year basis, all up over 25%.

The Wellington market; which had recently seen some growing inventory reported a 6% fall year-on-year with just 691 new listings.

Coromandel reported the biggest fall, with just 156 new listings down 33% on June 2011.

Regional Summary – Inventory

The inventory of unsold homes on the market dropped quite significantly in June. The regional situation paints a clear and comprehensive picture with all regions experiencing a sellers’ market.

The key metro markets of Auckland, Wellington and Canterbury all show inventory below 20 weeks of equivalent sale – in the case of Canterbury and Auckland these are the lowest level going back over 4½ years at 16 weeks and 18 weeks respectively.

In addition to these 3 metro regions a further 6 regions are witnessing levels of inventory significantly below their long term average as indicated by the dark blue boxes on the chart.

There are just 5 regions where inventory is sitting just above the long term average – Central North Island, Gisborne, Marlborough, Southland and Taranaki. All of these have seen a fall in inventory in June and therefore are favouring sellers with an anticipation that the traditional winter shortfall of listings will continue through until September..

Lifestyle

Lifestyle property listings fell in June in line with the trend of total listing. A total of 808 listings came onto the market, down 2% year-on-year and down 17% as compared to May. The truncated mean asking price for these listings fell 3.1% as compared to the recent 3 month average to $631,579 – easing from the record high in asking price set in May.

Across the country, Northland recorded a record low of new listings with just 48 added in the month as compared to a long term average of 120. Strong growth was seen though in Otago and the Manawatu with year-on-year growth of 23% and 110% respectively.

Apartments

Listings for apartments eased in June from May with 439 being brought to the market, on a year-on-year basis listings were identical to June 2011. The truncated mean asking price of new listings slipped to $360,618 in June from $371,703 in May, representing a 9% year-on-year decrease and down 4% on the recent 3 month average.

The Auckland apartment market followed the national trend with 271 new listings coming onto the market, down just 1% from May and also down 6% from June last year. The truncated mean asking price of new listings fell significantly to $319,979 from $382,064 in May representing a 11% fall on the prior 3 months.

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 from licensed real estate agents, 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 1,000 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 9,689 new listings in the month of June, a total of 193 listings have been excluded due to anomalies. The land area of the property defines the categorisation of Lifestyle property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.

Seasonally adjustment

The core data for the NZ Property Report is seasonally adjusted to better represent the core underlying trend of the property market in NZ. In preparing this seasonally adjusted data Realestate.co.nz is grateful for the assistance of the New Zealand Institute of Economic Research (NZIER) who use an X12 ARIMA methodology to calculate seasonally adjusted data.

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.

The web business of Realestate.co.nz site is the most comprehensive real estate web operation in NZ, currently hosting over 110,000 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 1,000 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for June 2011 can be downloaded here (1.2MB 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 2012 will be published on this website on Wednesday 1st August 2012 at 10am.

Don’t delay – get your property on the market

Posted on: June 28th, 2012 | Filed in Featured, Market News

The message from the market of the past 12 months has been of a shortage of listings. The NZ Property Report back in May of last year foreshadowed this situation by stating that the market has reached a turning point, subsequent months have only reinforced this perspective, as property sales have remained strong with a consistent 20+% year-on-year growth as evidenced by the chart below which tracks the % growth / decline of the market over the past 4 years.

In the space of 12 months the inventory of property on the market (measured by the equivalent rate of sale in weeks) has gone from 47 weeks down to 36 weeks, a fall of over 20%. In actual numbers, the stock of property on the market in June last year was 47,738 whereas today it sits at 43,917 – the key difference is that this time last year around 161 properties were being sold a day whereas now it is up over 200.

The key question though has been, when would inventory start to rise, when would homeowners take note of the market signals and create a steady flow of new listings coming onto the market driven by this strong sellers’ market that has been present for close on a year. Back in February an analysis was undertaken to identify the likely trend for sales and new listings through 2012. At that time there was a belief borne of analysis that identified a 6 months lag between the trend of sales and the response of listings – sales being the demand leading indicator and listings being the supply lagging indicator.

The analysis foretold a picture of steadily rising new listings through this year as represented by the chart below (listings being represented by the red line measured off the left hand axis, sales being represented by the blue line measured off the right hand axis):

The forecast at that time anticipated that new listings would rise steeply from around 10,500 per month to around 12,000 per month on a moving average basis as the year progressed, thereby providing a match to the rise in sales which were anticipated to rise from 4,600 a month to just under 6,000 per month, again on a 12 month moving average basis.

However with 5 months of activity under our belt for the year it is valuable to see how the forecast is tracking. As far as sales are concerned the rise since the start of the year has tracked exactly as forecast and by the end of the year sales will likely slightly exceed the forecast of 6,000 a month on a 12 month moving average basis as shown int he chart below. However when it comes to listings things are not tracking to the forecast – the red line below shows a revised forecast reflective of recent levels of new listings and seasonal trends out to the end of the year.

This revised forecast now looks more like a year end position of just over 11,500 listings a month on a 12 month moving average basis.

This continued lag in the trend of new listings is likely to see a continued pressure on the market with continued shortages in specific local markets. That means the message appears to be the same as at the start of the year – if you are thinking of selling then now would look like a good time to get your property on the market. However I hear a lot of people saying – isn’t that the message the industry always wants the market to hear? – well of course; but I can assure you I am not speaking from the motivation of the real estate industry, I am purely trying to share insight from the available data and analysis which we derive from the website.

Part of the extrapolation of this revised forecast is the seasonal trend of new listings. This data which has been shared before (in fact 2 years ago in an article titled “Is summer really the best time to sell a property?“) is that the variance by month of new listings is more extreme than that for sales through the year. This fact is best showacsed in the chart below which tracks the % each month represents of annual sales and annual listings (based on 6 years worth of data).

The chart shows very clearly through the green bars those months when sales proportionally are higher than listings – the winter months; and in the red bars the months when listings are proportionally higher than sales – the summer months. The take out of this data is that potentially to list a house over the winter allows you to compete in a less cluttered market in which buyers are still active. This period extends from May through to August before that classic spring surge of new listings occurs.

So just maybe the smarter sellers and smarter agents can benefit from this insight and help homeowners choose the right time to sell and profit from greater insight based on data.

Energy efficiency as important as aesthetic features for house buyers

Posted on: June 27th, 2012 | Filed in Buying / Selling a home, Featured, Green

There is a widely held opinion that the things that matter most to home buyers are gourmet kitchens and spectacular indoor / outdoor flow

The reality though is that this perception is changing, and energy efficiency to provide a warm and dry home is fast rising up the shopping list for buyers.

A survey undertaken by Realestate.co.nz in association with the Green Building Council for the Sustainable Housing Summit surveyed over 1,700 people as to their attitude to features seen as important when looking for a home to buy.

The number one feature that home buyers judged as most important was the orientation of the property to the sun. More than half of those surveyed regarded this as of “very high importance” with a further one third rating it as “high importance”. This compares to the importance of a gourmet kitchen, which scored just 16% on the scale of “very high importance” with 34% judging it as of “high importance”.

After orientation to the sun, the next most important feature was a high level of insulation. Scoring a 46% on the scale of “very high importance” and 35% of “high importance, insulation surpassed other aesthetic features such as a 3rd bedroom and off street parking, as well as the ubiquitous “indoor / outdoor flow”.

The full list of 18 features are detailed below on a mean importance score on a 1 to 5 scale. The features highlighted in red relate to energy efficiency and performance rating of a home.

Inspection Priorities

The survey went on to investigate to what extent buyers had inquired or inspected for aspects of environment / energy performance. In this case the 3 features that are “visible” and top-of-mind for buyers were inquired of in more than 70% of the time – presence of insulation, inquiring about heating and asking questions about dampness. Certainly buyers appear to be front-footed on these performance features that impact the warmth and comfort of the home.

On the other hand fewer asked questions about water an operating costs or any environmental features of the home each inquired about by less than a third of buyers.

Price Premium

Of those questioned who were looking to sell their property or had recently sold a staggering 88% believed that there was the potential for a price premium for properties that could demonstrate performance features such as energy, water and heating efficiency.

We then went on to seek to find out what type of features would most impact this perception of a price premium. The big 3 items were high levels of insulation, efficient heating and cooling system and double-glazing. Judged of lower opinion on a 1 to 5 importance rating score were low energy lighting, fixtures and fitting with low toxicity and or an independent rating certificate for a home’s performance.

This is the first such comprehensive survey undertaken into this area of home buying. It certainly has established that energy performance and the warmth and health aspects of a home are very much on the shopping list. As to what buyers look for as a signal, at this stage it appears to be very much around tangible items that can be seen and touched as opposed as to performance measures behind features. Time will tell if these performance measures move up the priority list and start to surpass that granite benchtop.

Property Pulse – May 2012

Posted on: June 19th, 2012 | Filed in Featured, Property Pulse - Regional Market Report

On a regular basis we publish a factsheet for each region of the country as well as a national report to provide an insight to the key numbers that detail the health of the property market across the country.

These reports for the month of May cover all 16 provincial regions as well as reports covering the 3 main metropolitan regions of Auckland, Wellington and Christchurch. The Auckland report is divided up into each of the main metro areas (North Shore, Waitakere, Manukau as well as Auckland City).

Each factsheet provides the key numbers in table and chart form using the key statistics from the Real Estate Institute of NZ and Realestate.co.nz. This provides the number of property sales in the month, the median sales price for those property sales, the inventory of unsold properties on the market, as well as the number and the asking price expectation of new listings brought onto the market in the month.

Metropolitan Areas

Provincial Areas

National Property Pulse factsheet

The national property pulse factsheet for May 2012 is published using data from Realestate.co.nz and REINZ (Real Estate Institute of NZ).

Property sales across the country totaled 7,175 in the month showing a significant rise on a seasonally adjusted basis in May as well as a 24% increase as compared to a year ago. The inventory of unsold houses on the market at 36 weeks has risen for the second month in a row after witnessing a steady and consistent fall of over a year. The current level of unsold properties on the market represents a very clear sellers market, well below the long-term average of 41 weeks of equivalent sales.

The stratified median house price for property sales in May was $381,950 which represents a 6% increase from May last year. The recent trend has been of a steady increase for the past 18 months. The asking price expectation of new listings rose in May to $453,887, a 5% increase from the asking price in May last year.

The level of new listings coming onto the market in May at 11,544 was up significantly from April, and up 17% as compared to a year ago.

NZ Property Report – May 2012

Posted on: June 1st, 2012 | Filed in Featured, NZ Property Report

The May 2012 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 May. 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 96% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – May 2012 is published below and is available for download (1.2MB) and distribution.

A video interview of the NZ Property Report for May with Bernard Hickey of Interest.co.nz provides a concise 6 minute insight into the market across the country.

Summary of the market – May 2012

The message in the property market for the past 6 months at least, has been that there is a shortage of listings. In the major metro areas of Auckland and Canterbury this shortage has been more acute especially at a suburb level. It appears from the May data on the supply side of the market that this message has finally got through to sellers. The level of new listings in May was counter-seasonal; when we normally see a slowing of new listings coming onto the market heading into winter we actually saw a rise, and quite a significant rise – 16% increase on a seasonally adjusted basis.

This rise in new stock has lead to a fast adjustment in a number of provincial regions where the market was firmly biased to sellers and is now showing a more balanced market. This however is not the outcome in Auckland and Canterbury where despite this surge of new listings, the inventory as measured against the rate of sale has actually fallen, demonstrating the levels of activity in these markets where property is selling fast.

The unseasonal rise in listings has certainly come with an ensuing surge of confidence in those new sellers – they have signaled this confidence in the asking price expectation, which has again set a new record level. This rise was most accentuated in the two key markets of Auckland and Canterbury which both set new record levels of asking price.

The challenge for the market in the coming winter period will be if the surge of listings continues and what impact that will have on the inventory and the ability for the buyer demand evident through the summer/autumn to continue, potentially less of an issue in the major metros than provincial regions.

Asking Price

The seasonally adjusted truncated mean asking price for listings in May set a new record high of $435,887, this represents a significant increase from the prior peak in March of this year of $429,865. The month-on-month increase of 2.8% is the highest single increase since Sep 2009. As compares to a year ago the truncated mean asking price is up 4.5%.

New Listings

The level of new listings coming onto the market in May rose sharply with a total of 11,544. This represents a seasonally adjusted 16% increase. The increase year-on-year is 17%.

On a 12 month moving average basis a total of 129,711 new listings have come onto the market since June 2011 as compared to 127,843 in the prior 12 month period, a rise of 1.5%. This is the first moving annual total increase in over a year.

Inventory

The level of unsold houses on the market at the end of May (46,016) was down as compared to April (46,948) as measured on a seasonally adjusted basis. The inventory as measured in terms of equivalent weeks of sales shows a further upturn to 35.7 weeks from 33.7 weeks last month. This is the third straight month with increasing inventory – reversing what had been a 6 month consistent decline from October through to March of this year.

Regional Summary – Asking price expectations

The national (seasonally adjusted) truncated mean asking price expectation among sellers rose significantly in May by 2.8% to $435,887.

Across the 19 regions of the country the price movements are varied with 11 showing increases and 8 decreases. The major movement are very evident on the East Coast with Gisborne, Hawkes Bay and Manawatu / Wanganui showing steep declines, joined by the West Coast. In contrast the five regions of Wairarapa, Northland, Coromandel, Nelson and Taranaki showed big increases, in the case of the latter region an increase of 15%.

The major metro regions showed slight movement with Auckland being the largest with a 1.7% increase to set a new record asking price of $578,533. Canterbury with a seasonally adjusted increase of just 0.5% though did also set a new record asking price at $383,504. Wellington by contrast was down 0.1% in seasonally adjusted asking price at $429,836 which is 5% below the peak asking price of Feb 2011.

Regional Summary – Listings

Listings volumes coming onto the market in May was well ahead of the seasonal trend which tends to see a slow down as the market heads towards winter. Across the country only one region (Central North Island) showed a decline in new listings as compared to last May.

Significant year-on-year increases of over 20% were seen in 9 of the 19 regions. The largest increases were in the West Coast (75%), Taranaki (72%), Northland (56%) and the Waikato (43%).

It is interesting to align the chart of new listings by region to the inventory by region. Most striking is the fact that the two regions facing the greatest shortage in listings being Auckland and Canterbury saw some of the lowest rise in new listings in the month, well below the national average.

Regional Summary – Inventory

The inventory of unsold homes on the market rose again in May, creeping closer to the long term average as the market re-balances.

This re-balancing is however not occurring in the two major markets of Canterbury and Auckland where the inventory continues to fall. Both Auckland and Canterbury have also reached new record 5 year lows in inventory and now both are over 33% below their respective long term average.

Noticeable outside of these regions is the extent to which the remaining 17 regions are edging out of tight sellers’ markets into more balanced markets and the emergence of some buyers markets. As compared to April when there were 4 provincial markets under strain of a shortage of listings to this month with none. The majority of provincial markets are fairly well balanced between buyer and sellers providing a good balance heading into the slightly quieter winter months.

Lifestyle

Lifestyle property listings rose in May in line with the trend of total listing. A total of 978 listings came onto the market, up 16% year-on-year and up 17% as compared to April. The truncated mean asking price for these listings rose 1.2% as compared to the recent 3 month average to $655,740 – taking the level to another record high in asking price, surpassing the peak attained over the last 3 months. Across the regions, Wellington recorded a new record high of $905,100.

Across the country, year-on-year comparison of new listings were up significantly in the Bay of Plenty (+96%), Taranaki (+92%) and Northland (+64%).

Apartments

Listings for apartments rose in May with 495 being brought to the market, on a year-on-year basis listings were up 22%. The truncated mean asking price of new listings slipped to $371,703 in May from $384,861 in April, representing a 3% year-on-year decrease and down 3% on the recent 3 month average.

The Auckland apartment market followed the national trend with 288 new listings coming onto the market, up 14% from April and also up 8% from May last year. The truncated mean asking price of new listings rose to $362,421 from $359,196 in April representing a 5% rise on the prior 3 months.

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 11,554 new listings in the month of May, a total of 373 listings have been excluded due to anomalies. The land area of the property defines the categorisation of Lifestyle property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.

Seasonally adjustment

Background to Realestate.co.nz

The business operates a portfolio of websites all focused to specialist sectors of the real estate market:

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 full NZ Property Report for May 2011 can be downloaded here (1.2MB 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 2012 will be published on this website on Sunday 1st July 2012 at 10am.

Inflation and the impact on property prices

Posted on: May 29th, 2012 | Filed in Buying / Selling a home, Featured

There’s usually a quiet period late in the month, when there are few new facts to share on the state of the NZ real estate market – this I think provides a great opportunity to share a little-discussed aspects of property price movements. The truth about INFLATION!

We all know about inflation, and a lot of us are aware that in the dim and distant memory we had to contend with annual inflation rates of well over 10% – look for a moment at this chart of NZ inflation over the past 40 years – peaking at close to 20% per annum. Think of that in terms of price increases every couple of weeks by retailers trying to keep up with the cost of goods.

When it comes to house prices we all seem to think or know that prices rise faster than inflation in the long term. Take for example this property recently featured for sale in Auckland – the background article says it was purchased by the current owners in 1964 for £5,600 – today it has a rateable value of over $2.5m!

Out of interest the Reserve Bank online Inflation calculator states that ” a basket of goods and services that cost £5,600 in Q1 1964 would have cost the equivalent of $215,944.06 in Q4 2011″. That example would certainly support the view that property prices in the long term outpace inflation.

Inflation though has been somewhat more benign over the past decade – averaging just 2.7%. However this “low” level of inflation still has an effect in reducing the value of goods over time. Despite this low inflation of the past 12 years, $100 in 2000 would be worth $138.12 in today’s money – the power of compounding certainly adds up quickly.

So what has been the impact of inflation on property prices over the past 5 years since the property market fell from the heady heights of the middle of the last decade? As a base the REINZ / Reserve Bank Stratified Price index shows in the chart below that closing in on the 5th anniversary of the market fall the current property sales prices in April are still some 1.4% below the peak of November 2007.

Now by using the Reserve Bank inflation calculator you can see the true value of property prices adjusted for inflation over this 5 year period. The chart below shows the monthly Stratified median Price Index adjusted to today’s $ value.

Property prices are in fact 12.8% lower than they were when the market peaked in late 2007. At the lowest point in January last year they had fallen in inflation adjusted terms by over 16% from the peak of the market. What this means is that if you had bought a property in September 2007 at what was then the median price in NZ of $379,075; if the price of that property had increased in value by inflation alone over the close-to 5 year period it would today be worth $430,481. By comparison the median house price in NZ in April was $375,575. A difference of close to $55,000 – sobering to see!

In order to provide some assistance to home owners wondering what impact inflation has had on property appreciation over the past decade this chart below provides what I like to think of as a ready-reckoner. All you need to do is refer along the horizontal axis as to when you purchased your house and then see how much appreciation or depreciation has occurred to NZ property prices over that period. This refers to the median price of property sold each month, clearly property of differing condition and in different parts of the country would fair differently over the period, but never-the-less it does provide a useful guide.

So if you bought in January 2003 removing the impact of inflation the average NZ property will have appreciated in value by 45%, whereas sadly of you purchased a property in January 2008 the average NZ property will have depreciated by 7%.

What this also means as illustrated on the chart by the dotted vertical line, is that property purchased nearly 7 years ago in September 2005, when adjusted for inflation over the period has not really appreciated at all.

Financial stress in the property market appears to be easing as mortgagee listings decline

Posted on: May 14th, 2012 | Filed in Buying / Selling a home, Featured

A key measure of the financial stress of the property market over the period of the past 5 years has been the incidence of properties succumbing to mortgagee sales; that situation where the owner has to accept that the potentially long held dream of a family home or of an investment portfolio of properties slips away as the financial burden becomes too far for the regular salary or rental income stream to support.

We appear from the data tracked at realestate.co.nz to finally be seeing an end to the mortgagee stress in the market. Whilst the property publications still feature the distressed black and white photo montage of current mortgagee properties the fact is the number of properties in NZ advertised as mortgagee sale or auction is on the decline and is edging closer to a level not seen since before the global financial crisis.

As of this week the number of mortgagee properties on the market has dropped below 190 – this compares to 260 a year ago and over 380 in May of 2009. These numbers might still seem significant, however when seen in the context of the current property market with just under 50,000 residential properties on the market this total represents less than one half of one percent of all listings.

In fact even at the peak of the distress in the property market the total never exceeded 1% – this compares to well over 10% of all US properties being sold over the recent 5 years being the subject of a foreclosure as the Americans term mortgagee sale.

However as is always the case scrape a little below the surface and you start to see some interesting facts. What appears to be a steady declining trend is actually a tale of 2 markets.

The chart below tracks the Auckland market for mortgagee listings as compared to the rest of NZ. As can be seen back in 2008/2009 at the peak of the financial crisis Auckland in total represented over half of all the mortgagee properties on the market.

Through 2010 and 2011 that percentage has been declining and has accelerated significantly in 2012 to the extent that Auckland today represents just 1 in 5 of all the mortgagee listings on the market. Whilst in contrast the financial pressure which can lead to mortgagee sales is still being felt outside of Auckland as the scale of listing for mortgagee properties has not changed that much over recent years.

Looking at specific regions; the Bay of Plenty stands out with 13% of the national total of all mortgagee listings as compared to just 4% at the peak of the market; Similarly Manawatu/Wanganui today represents 7% of all the national listings of mortgagee properties as compared to just 2% 4 years ago. Northland now has one in ten of all mortgagee listings as compared to one in twenty 4 years ago.

The pressure may be easing in the financial burden of mortgage sales but clearly it is not easing in an evenly distributed way across the country.

Auckland Property Report – April 2012

Posted on: May 2nd, 2012 | Filed in Featured, NZ Property Report, Regional News

This special regional property report on the Auckland market was published for a presentation given to the Auckland Property Investors Association. The format reflects the monthly national report but provides commentary and charts specifically to the Auckland region.

The April 2012 Auckland Property Report published by Realestate.co.nz provides an insight into the state of the Auckland property market as measured by the supply side of the property market over the month of April. 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 98% of all property movements in the Auckland market as managed by licensed real estate agents.

A full print version of the Auckland Property Report – April 2012 is published below and is available for download (1.2MB) and distribution.

Summary of the market – April 2012

The Auckland property market continues to drive ahead, even as the remainder of the country sees some re-balancing of the market. The market is firmly in the seller’s camp and this is evident by the pressure of constrained inventory which continues to hold at levels well below long term average and a year ago. In fact the levels are the lowest seen since the start of the property market slow-up in 2007.

Sales of property remain strong with the 2,806 properties sold in March across the region, this is up 18% as compared to the prior year, but was very slightly down from February on a seasonally adjusted basis by 1%. This level of demand has driven the asking price higher as sellers read the market signals and recongise the potential for a stronger selling price than a year ago.

The weakness of listings remains of concern, the 3,159 new properties coming onto the market in April were down 5% on a year ago and 14% down on February on a seasonally adjusted basis.

The next 3 month traditionally represent a quieter time for new listings as sellers feel the summer peak appeal period has passed, this is however not the case when it comes to demand from buyers who remain active through this winter period, the key will be if astute sellers recognize this and capitalize on what appears to be sustained demand to seek the best outcome for their property sale.

Asking Price

The seasonally adjusted truncated mean asking price for listings in April rose again to a new record level of $568,820 up 1.7% on the March level and up 2.5% from April last year. Auckland asking prices are second only to the Queenstown region which is nudging the $600,000 asking price mark at $595,766 in April.

New Listings

The level of new listings coming onto the market in April fell significantly with a total of 3,159. This represents a fall of 5% as compared to April last year. On a seasonally adjusted basis the April figure was down 14% from March.

On a 12 month moving average basis a total of 42,272 new listings have come onto the market since May 2011 as compared to 41,850 in the prior 12 month period, a slight increase of just 1%. This compares to sales up 22% on the same 12 month comparable basis

Inventory

The level of unsold houses on the market at the end of April as measured on a seasonally adjusted basis at 10,941 was down 1% as compared to March. A year ago the inventory totaled 12,001.

As measured in weeks of equivalent sales the April level of 21.7 remained the same as March. The long term average for Auckland is 33 weeks and a year ago the level was 28 weeks.

Supplemental data

Property Sales

Property sales over the past 5 years in Auckland have gone through some significant shifts as the chart shows. There have been 2 periods with growth, and 2 periods of decline. Actual sales at this time (seasonally adjusted are at the highest level since the market suffered the significant decline between 2007 and 2008. This current period of growth in sales started in October 2010 and represents a 76% increase from that time.

Sales Price

The Stratified mean sales price (REINZ) for property in Auckland has gone through a sustained recovery over the past year and is now at a new high of $516,700. This represents a 1.3% increase from the prior high of July 2007. The chart very clearly reflects the impact of the price decline through the period of 2007 to 2009 resulting in a 14.6% adjustment in Auckland property prices.

NZ Property Report – April 2012

Posted on: May 1st, 2012 | Filed in Featured, NZ Property Report

The April 2012 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 April. 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 96% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – April 2012 is published below and is available for download (1.2MB) and distribution.

Summary of the market – April 2012

April did not witness a flood of listings as might have been expected given the signals which have been flashing for some months now in the media that the property market is alert and very much alive; more so in the main centers of the country. Instead levels of listings were nearly identical to April last year.

This however, did not have the expected downward pressure on inventory of unsold houses on the market; this was due to the fact that whilst property sales are strong the latest month’s data for March did not show a seasonally adjusted increase.

This indicates that the market would appear not to be diving headlong into a property bubble, but rather is seeing steady turnover and pragmatic buying and selling in the main.

This behavoural change is supported by the asking price trend which in both seasonally adjusted and normal data eased slightly from recent consecutive new highs. This would support the view that the market is balancing buyers demand with sellers expectation well. Clearly there are pockets of the market where there is not quite this degree of balance, Auckland for example continues to feel the impact of listings in short supply with a new record high asking price, the 3rd in the past 8 months.

The next 3 months are traditionally a quieter time for the market with lower listings ahead of the spring pick up in August, if property sales continue strongly it is likely that asking prices may well creep up further as demand flows through to vendor expectations.

Asking Price

The seasonally adjusted truncated mean asking price for listings in April eased slightly to $423,832 from the high in March of $429,865. This easing in the month was not universally representative of all regions with Auckland again pushing a new higher peak of asking price.

The trend as seen in the chart covering the last 3 years very clearly shows a continuing growth in asking price over the recent 12 months as compared to 2010/2011.

New Listings

The level of new listings coming onto the market in April fell with a total of 10,174. This represents a seasonally adjusted 10% fall from March and is nearly identical to April last year.

On a 12 month moving average basis a total of 128,065 new listings have come onto the market since May 2011 as compared to 129,678 in the prior 12 month period, a fall of just 1.2%. This compares to sales which are up 18% on the same 12 month comparable basis

Inventory

The level of unsold houses on the market at the end of April (46,948) was up as compared to March (46,462) as measured on a seasonally adjusted basis. This total includes houses, apartments and lifestyle properties on the market. With the rising rate of property sales the inventory on the market has seen a significant drop off over the past 6 months pushing it well below the long term average of 41 weeks of equivalent sales.

Regional Summary – Asking price expectations

The national (seasonally adjusted) truncated mean asking price expectation among sellers eased slightly in April to $423,832.

Around the country the dominant trend was an easing of asking prices with 11 of the 19 regions reporting falls, ranging from just 0.2% in Gisborne to a massive 12.8% in Wiararapa. There were 5 regions where the asking price showed a fall of greater than 5% – Waikato, Nelson, Southland, Marlborough as well as Wairarapa.

In contrast there were some strong growth in asking price with Hawkes Bay and West Coast reporting prices up 14.1% and 5.1% respectively.

Two regions – Auckland and Hawkes Bay reported new record levels of asking prices, in the case of the Hawkes Bay the prior high was last seen way back in 2007 whereas Auckland’s prior high was only 2 months ago.

Regional Summary – Listings

Listings volumes coming onto the market in April matched last April with 10 of the 19 regions seeing less than the same volumes in April last year. Significantly lower volumes were seen in Gisborne (-63%) and Central Otago / Queenstown (-48%), with Coromandel, Central North Island and Nelson all seeing volumes of greater than 20% below last April.

In contrast new listings flowed onto the market across Marlborough, Northland, Hawkes Bay, West Coast and Taranaki with volumes of new listings in all of these regions over 25% up on prior year.

The overall picture from this regional view of listings certainly backs up the position of the market rebalancing in terms of listings.

Regional Summary – Inventory

The inventory of unsold homes on the market eased slightly in April having reached a 4 year low in March.

Across the country the regions showed some rebalancing with the overall trend to a sellers’ market dominating the majority of regions.

There are still 6 regions highlighted in dark blue on the adjacent chart where the market is firmly in the sellers’ domain, this is one less than last month with Marlborough easing the pressure with a stronger flow of new listings.

In contrast there are this month 5 regions where buyers have the upper hand (dark green in the adjacent chart) – 2 more than last month. These additions are Coromandel and Taranaki, this again is the result of stronger flow of new listings.

Lifestyle

Lifestyle property listings fell significantly in April after witnessing strong rises in February and March. A total of 835 listings came onto the market, down 20% year-on-year and down 28% as compared to March. The truncated mean asking price for these listings rose 3% as compared to the recent 3 month average to $655,009 – taking the level to another record high in asking price, surpassing the peak attained over the last 2 months. Across the regions, four reached new asking price highs – West Coast, Canterbury, Southland and Marlborough.

Across the country, listings were weak with just 6 regions reporting year-on-year growth in listings. In contrast lifestyle listings in the Hawkes Bay hit a new record high with 100 listings coming onto the market in April.

Apartments

Listings for apartments fell in April with just 398 being brought to the market, on a year-on-year basis listings were down 12%. The truncated mean asking price of new listings rose to $384,861 in April from $366,288 in March, representing a 4% year-on-year decrease but up 3% on the recent 3 month average.

The Auckland apartment market followed the national trend with 252 new listings coming onto the market, down 20% from March and also down 12% from April last year. The truncated mean asking price of new listings rose to $359,196 from $338,046 in March representing a 3% rise on the prior 3 months.

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 10,174 new listings in the month of April, a total of 145 listings have been excluded due to anomalies. The land area of the property defines the categorisation of Lifestyle property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.

Seasonally adjustment

Background to Realestate.co.nz

The business operates a portfolio of websites all focused to specialist sectors of the real estate market:

The full NZ Property Report for April 2011 can be downloaded here (1.2MB pdf document). Additionally the raw data tables with full data back to 2007 in both actual and seasonally adjusted form is accessible on this freely available spreadsheet hosted on Google Docs 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 May 2012 will be published on this website on Friday 1st June 2012 at 10am.

Property listings out of line with fast paced property sales

Posted on: April 27th, 2012 | Filed in Featured, Property Pulse - Regional Market Report

The quarterly analysis of the property market covering the first 3 months of 2012 clearly show that sales have really taken off, but as yet listings are slow to respond.

The chart below paints a very clear picture of this situation. The quarterly sales growth represented by the red bars shows that year-on-year sales growth has been in positive territory and growing at an accelerated rate for 4 consecutive quarters.

It all began a year ago, when in the second quarter of 2011 the sales year-on-year grew by 7%. The next quarter this grew to 18% and then in the final quarter of 2011 the sales of property really accelerated to 22% year-0n-year growth.

The start of 2012 has seen this growth accelerate again with a 29% growth. This growth represents 3,969 more properties sold in the first 3 months of 2012 than compared to the same time last year – an extra 44 properties a day being sold.

This rise in sales is not being matched as yet by a rise in new listings, as represented by the blue bars in the chart. In the first 3 months of 2012 there has been an increase, but only a 10% increase, but that is not approaching the consistent rise in property sales that has been seen over the past year.

This clearly demonstrates the lag that occurs between sales activity as a measure of demand in the property market and the resultant supply side reaction – usually a 6 months lag.

Around the country, across the 19 regions tracked by REINZ and Realestate.co.nz the picture in the majority of regions is consistent – listings lagging the rise in sales.

The region which standouts for a contrarian trend though is the Coromandel – weaker sales and declining listings.