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Archive for the ‘Featured’ Category

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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.

 

5

Realestate.co.nz provides innovative solution for native speaking chinese property buyers

Posted on: April 19th, 2012 | Filed in Featured, International, Website news, Website searching

The appeal of NZ property is universal – we are lucky (some would say) to live in such a beautiful country, a place many people can only dream of living. Our property though is accessible and appealing to overseas investors and prospective new residents.

Just compare NZ to Australia, here there is no Capital Gains Tax or Stamp duty; additionally overseas investors are restricted in Australia to new builds as opposed to the far more limited restrictions here.

These circumstances are driving an ever growing audience to listings on Realestate.co.nz from overseas. Just last month over 110,000 unique visitors checked out property on the site from outside NZ, that represents over 1 in 4 of all of our visitors each month.

The most active viewers are those in the English speaking countries of Australia, UK, US and Canada, but Asia is assuming a greater and greater presence among this audience growing at 3 times the rate of growth of other countries. This certainly reflects the economic relations NZ is building with its Asia Pacific partners.

This audience though is not as well catered for as English language speakers. This is somethingthat we have focused on over the past year. The main issue facing us has been the ability for us to provide a Chinese language version of the site which can rank highly when Chinese based property seekers are searching for NZ property – especially as the major search engine in China is Baidu. As a company we have always invested heavily in Search Engine Optimistion (SEO) to drive our site and brand given the credibility this brings to our site, however optimising in English for Google is a very different issue from optimising for Chinese language search on Baidu.

This challenge has been solved through a partnership which Realestate.co.nz has established with a NZ/Chinese company HouGarden.com. The company combines the domestic Chinese technology team with the best of SEO capabilities in the Chinese market. Based in Auckland and Beijing, Hougarden has built a website that provides a rich information source for property seekers combining the full listings from Realestate.co.nz translated into Chinese with translated news stories covering the broad NZ economy and property news.

It was decided that translated listings in Chinese would be best presented on a separate website and domain name, rather than on a sub domain of realestate.co.nz and that is the rationale for the partnership with Hougarden.

So how does it work?

Hougarden uses the API of Realestate.co.nz listings to populate their website, all the content of listings including photos, description as well as agent contact details are provided on the HouGarden site in Chinese. By using the API the listings on HouGarden are synchronised with Realestate.co.nz so new listings and withdrawn listings are updated at the same time.

The site provides the great functionality and usability as Realestate.co.nz and the deliberate similarity in look and feel is a deliberate decision to reflect the true partnership relationship.

Property seekers making an enquiry through the HouGarden website by email can choose to respond in Chinese or in English. These email pass through Realestate.co.nz with a human translations service provided by HouGarden. The agent will receive the enquiry in English with a clear message detailing that the enquiry has come via HouGarden website from a Chinese enquirer and whether the original enquiry was written in English or Chinese.

We recommend that agents receiving these enquiries develop a relationship with a Chinese speaking colleague to assist in managing these requests, although clearly an enquiry written originally in English can be directly responded to. It is the plan for the future for Hougarden to potentially provide a return translation service.

The launch of Hougarden was marked this week by a presentation and official signing ceremony in Auckland. Pictured below is Sam Yin the Managing Director of HouGarden.com with myself after the signing ceremony.

We are very excited by this development as a further means for Realestate.co.nz to provide increased profile and advertising for our customers’ listings – reaching out to the massive audience of 1.3 billion Chinese both in NZ and in China.

3

Mobile real estate – its the smarter way to search for property

Posted on: April 11th, 2012 | Filed in Featured, mobile, Technology, Website searching

It seems that there’s really only one smart way to search for property in 2012 – that’s on a mobile device. Over the past week the usage of mobile devices to access real estate listing content blew through yet another new record.

A staggering 1 in 5 of property hunters used a mobile device to find property information – 22% of all views of listings on realestate.co.nz were undertaken on the go, from a mobile device. That’s a massive increase from just 8% a year ago.

Even more impressive is the fact that mobile users engage with the mobile app far more than the website – it is turning out to be very “sticky” – the average visitor using the app views 37 pages per visit as compared to just 11 on the website. People clearly recognise the real value of having real data in the palm of their hand.

The key fact to bear in mind when it comes to mobile, is that users on the mobile platform are by-and-large more likely to be seriously active property seekers. The mobile is not a “lean back experience” as the web can be with super-glossy wide screen images, the mobile is about information. Location details, listing details, great photos and easy contact to the agent by phone, email or text.

 

Choice of mobile device

When it comes to the choice of device the most popular was the iPad – it represented nearly half of all mobile usage in March. On the iPad the app though only represented 20% of users with the other 80% of users choosing to view the website on the device. The iPhone represented 40% of all mobile users in the month with a 60/40 split between the app and the web. Android came in 3rd with 14% of all mobile users, although it is fast catching up ground, with a 6 fold increase in the past year; its usage is evenly split between app and the web.

There are some interesting insights of mobile usage which surprise some people. Mobile usage is not restricted to just the main cities and large towns, in an average month, every single listings we have in the database with an address is viewed at least once. That shows the mobile app is used right around the country when discovering property around you for sale or rent from Kaitia to the Bluff!

 

NZ’s favourite real estate app

The app is clearly NZ’s favourite real estate app, blasting through 70,000th downloads and only growing faster by the day – an average week sees around 1,200 downloads, in the 4 days over Easter we saw over 1,600 downloads; taking us ever closer to 100,000 downloads in the next few months.

In the month of March over 85,000 visitors opened up the app to discover property for rent and for sale right around them, letting them make better house hunting decisions whilst out-and-about.

 

New Advertising

To further accelerate this rate of download and usage we are delighted to have our partner Westpac undertake another extensive advertising campaign on bus shelters and on TV. Our partnership with Westpac is mutually beneficial adding value to Westpac customers to help them in the home buying process by showing them a smart way to house hunt on the go with the app, as well as info on local branches, ATM’s and also contact details for their Mobile Mortgage Managers.

 

International Benchmarking

It is always useful to compare NZ uptake and usage of real estate mobile with key developed markets such as UK, Australia and the US.

The data for the UK is not the most recent; the leading website for real estate in the UK is Rightmove, back in August last year they reported in their half year report that 14% of access to listing was via the mobile, I am sure that has grown significantly since then.

In Australia the leading website of realestate.com.au reported that at December they had reached 700,000 downloads of their mobile apps. With a population 5 times that of NZ this means that our activity level is about half that of Australia.

In the US the leading website of Zillow was a very early innovator of the mobile platform, starting with an iPhone app in 2009 and now having an app for all platforms (inc Windows and Blackberry) – they report usage on mobile being 24% of all access to listings. In their Q4 financial report for 2011 they reported also that property was viewed on the mobile devices at the rate of 53 houses per second (3,180 per minute) in January. Now that is a stunning stat. For us in NZ we are currently seeing a rate of 24 houses viewed per minute. Allowing for the fact that the US population is 71 times that of NZ means that we are seeing activity at about half the rate of the US.

So as ever the rate of development overseas shows us how the the future is likely to look; and it looks like we will continue to see exponential growth in mobile usage across the various mobile devices, with NZ’s favourite real estate app only continuing to grow faster in usage and engagement.

 

The Realestate.co.nz mobile app is available for free from the Apple app store for iPhone or the Google Play store for Android devices.

 

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NZ Property Report – March 2012

Posted on: April 3rd, 2012 | Filed in Featured, NZ Property Report

The March 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 March. 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 – March 2012 is published below and is available for download (1.2MB) and distribution.

 

Summary of the market – March 2012

The message coming from the property market is that buyers are out and about and keen to get into the market, whether they are first-time buyers, mid-life stage buyers or even investors. Their eagerness to buy matched to availability of attractive financial support is however not being met with a consistent and sufficient supply of new listings. This scenario continues to drive this sellers’ market, where it is clear those homeowners who are putting their property on the market are expecting to see a higher sale price as flagged by this new record level of asking price in March.

Property sales are strong – 6,168 properties sold in February up 37% on a year ago (exclude the unique circumstances of the Christchurch earthquake and sales are still up 30%), and yet listings flow is not matching with just a 8% year-on-year growth, this is why the inventory supply of property on the market as measured by rate of sale has fallen 31% in the past year.

The next 3 months will be crucial as property sales traditionally remain strong through the Autumn, and without the ability of the market to be re-supplied with new listings the outcome could be further rises in asking price and sale price or more significantly a stalling of the market as buyers become wary of a market getting out of reach of the majority of buyers.

 

Asking Price

The seasonally adjusted truncated mean asking price for listings in March rose again to a new record level of $429,865 up $3,300 from February. This pushes the asking price up to another new high. The trend as seen in the chart covering the last 3 years very clearly shows an accelerating 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 March fell slightly with a total of 13,265. This represents a seasonally adjusted fall of just less than 1% from February and is up just 8% as compared to March last year.

On a 12 month moving average basis a total of 128,072 new listings have come onto the market since April 2011 as compared to 131,722 in the prior 12 month period, a fall of 2.8%. This compares to sales up 15% on the same 12 month comparable basis

 

Inventory

The level of unsold houses on the market at the end of March (46,411) was down as compared to February (47,030) 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 rose again in March to set a new high of $429,865.

Around the country the regions of Waikato and Canterbury recorded new record highs; in the case of Waikato the previous high was in December 2007, whilst Canterbury only posted it high last month. Across the country overall, 12 regions recorded asking prices up on prior month on a seasonally adjusted basis with big rises in Northland, Wairarapa and Nelson.

There were however, despite the record national asking price level some significant falls; most noticeable of which was Wellington, posting a 5.9% month-on-month seasonally adjusted fall to $423,554. This also represents a 5% fall on a year-on-year basis showing some weakness in the Capital city. The other notable regions recording falls were Gisborne and Central North Island.

 

Regional Summary – Listings

The general perspective of new listings coming onto the market as seen in the adjacent chart is that the majority of regions (15 of 19) are seeing a greater supply than a year ago. This is the case when seen in isolation, but the fact is that the rate of increase in the supply side of the market is not keeping pace with the sales side and this is resulting in the low level of inventory of properties on the market.

Strong levels of new listings in the Marlborough, West Coast, Central Otago / Queenstown are failing to arrest what are very low levels of inventory in these regions whilst the most at-risk regions (those experiencing low existing inventory and low listings growth) are Waikato and Canterbury, the former of which actually saw a fall in new listings despite the low inventory.

 

Regional Summary – Inventory

The inventory of unsold homes on the market tightened significantly again in March falling to 32.4 weeks of equivalent sales from 36.0 weeks on a seasonally adjusted basis.

Whilst the trend over the first 2 months of the new year has been to see some balance of inventory-to-demand the current picture as represented in the adjacent chart shows a market facing tightness in availability of listings with 7 of the 19 regions (dark blue) so low in inventory that they are very clearly providing sellers with the ultimate power. Coupled with these 7 regions, are a further 6 (light blue) where inventories are below long term average and show strong signs of a sellers’ market.

By contrast there are only 3 regions (Gisborne, Wairarapa and Otago) where the inventory levels are above long term average providing buyers with the advantage. Contrast this with the same view of the market 12 months ago and there was not one region where inventory was at or below the long term average.

 

Lifestyle

Lifestyle property listings rose sharply in March reflecting the general property market. A total of 1,048 Lifestyle property listings rose again in March after a strong rise in February. A total of 1,154 listings came onto the market, up 5% year-on-year and up 10% as compared to February. The truncated mean asking price for these listings rose 7% as compared to the recent 3 month average to $644,860 – taking the level to another record high in asking price, surpassing the peak attained last month.

Across the country, strong growth in listings were seen in Southland, Taranaki, Bay of Plenty, Marlborough and the Manawatu all posting rises of over 20% year-on-year.

 

Apartments

Listings for apartments slipped slightly between February and March with 527 being brought to the market, on a year-on-year basis listings were down 2%. The truncated mean asking price of new listings fell from $402,278 in February to $366,288 in March, representing a 3% year-on-year decrease and down 4% on the recent 3 month average.

The Auckland apartment market followed the national trend with 314 new listings coming onto the market, down 5% from February and also down 5% from March last year. The truncated mean asking price of new listings also fell to $338,046 from $390,021 in February representing a 5% decrease 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 13,265 new listings in the month of March, a total of 377 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.

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 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 March 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 April 2012 will be published on this website on Tuesday 1st May 2012 at 10am.

4

Property price pressure is clearly evident in Auckland and Christchurch

Posted on: March 20th, 2012 | Filed in Featured, REINZ Monthly data

The media has certainly been alert to discussions around the possibility of a housing boom starting to emerge – even seeing the Prime Minister weigh into the debate on TVNZ’s breakfast show yesterday.

Certainly the property market has come alive in the past 6 months with a significant increase in sales with some localised price increases, most significantly in Auckland and Christchurch. In these two markets when viewed on the basis of the more accurate Stratified median house price index as published jointly by the Reserve Bank and the Real Estate Institute (REINZ) you can see new peaks being achieved as detailed in the following 2 charts:

In Auckland the Stratified median price in February was $513,612 which is up $3,500 from the peak of the market before the crash of 2007  – a period of over four and a half years, although the last 14 months has seen a steady and progressive rise and in December the market price peaked at a new level of $516,625.

In Christchurch the Stratified median price in February was $355,725 which is still down from the peak of the market before the crash of 2007  – a period of over four and a half years, although the prices have been steadily rising for about two and a half years and in November the market price peaked at a new level of $367,025, up $4,500 from the 2007 peak.

These are the two most active regions in today’s market and yet neither are showing any real price appreciation when you factor in inflation over the past 5 years.

When you consider the national picture on house prices the chart below shows that the stratified median house price at $369,550 in February is still 3% below the peak of the market of November 2007, although the recent 14 months has seen a steady increase from a low of $351,450 in January 2011.

Looking at the Wellington market shows a very different picture. In this region stratified median price in February was $405,250, down 4.6% from the peak of Oct 2009 / Sep 2007 which saw prices of $424,615 and $423,955 respectively.

 

 

 

 

4

Are we about to see another property price bubble?

Posted on: March 14th, 2012 | Filed in Buying / Selling a home, Featured, Media commmentary, REINZ Monthly data

The weekend opinion piece by Bernard Hickey published on the NZ Herald (Bank blows bubbles) and on Interest.co.nz certainly captured attention with both media platforms receiving extensive comments from engaged readers.

The article proffers the opinion that the actions of the Reserve Bank back in 2003, in deciding to continually cut the Official Cash Rate from 5.75% to 5.0% and the hold it there despite the frothy economy was pivotal in driving the bubble in house prices seen to occur over the ensuing 4 years; during which time period as Bernard states “houses prices almost doubled”.

The fact is that the Stratified median house price in January 2003 was $203,550; just under 5 years later in November 2007 the market peaked with a price of $380,900 an 87% increase.

Bernard then goes on to state that the current activity by the Reserve Bank to hold the OCR at the current rate of 2.5% is “history repeating itself, or more colourfully put – deja vu all over again?” and given the recent rise in property sales, he goes on to forecasts that we are likely to see another property price bubble in the coming years.

To be clear Bernard is not saying that we will see an 87% increase in house prices over the next 5 years, he simply seeks to challenge the assumptions of the Reserve Bank and seek to highlight “worrying early signs” such as the latest report by Barfoot & Thompson for February and the BNZ – REINZ survey both citing “increasingly bubbly sounds” from the property market. The latest data from REINZ for February sales would seem to support this view.

This supposition deserves some deeper analysis of the underlying numbers (which are public data from REINZ) to bring some perspective to the discussion.

The chart below uses the REINZ / Reserve Bank Stratified median house price data and compares the prior 5 years to the start of 2003 against the most recent 5 year period as cited by Bernard, to see if the circumstances leading up to this sense of deja vu are really that similar.

The chart shows the 5 year period of 1998 to 2003 in the blue line with the left hand axis, tracked against the most recent 5 years of Stratified median house prices to February 2012 with the red line on the right hand axis. Matching these 2 separate 5 year periods provides a valid comparison allowing for the very different scales.

What is clear from the chart is that property prices in the run up to the decisions made by the Reserve Bank in 2003 were already on the rise; and had been for over 20 months. In fact based on the point 22 months back on the chart (April 2001) the stratified median house price was $176,775. From then on prices started to rise and by the zero month on the chart representing Feb 2003 they were already up by 17% before the actions of the Reserve Bank.

By comparison the recent 5 year period showed a turning point around 28 months ago (Oct 2009) when prices had been rising and leveled off, from that point in October 2009 right up until this month of February 2012 prices have risen by less than 1%. In fact the rise has been only $575.

The chart below shows the consequential impact as judged by Bernard as to the actions of the Reserve Bank through the 4 years following 2003.

Pretty striking – the question is, will the current market take off to such an extent? Based on the current data is looks less likely I would suggest.

There is no doubt that the heat in the NZ property market at this time is in Auckland and to analyse this region separately can add further insight to this discussion, therefore below is the paired charts for Auckland on the same perspective as the national charts above.

The interpretation I would make from this view of Auckland would be that the trend is mirroring the national perspective with a faster rate of increase, much as was seen in the 1998 to 2006 period. That would seem to support the view that we are likely to see some price increase in Auckland and across the country in the coming 5 years but not of the scale of the 2003 to 2007 period.

 

Fundamental Economics

In discussing the likelihood of a property price bubble it is critical not to ignore fundamental economics – the laws of supply and demand. On the supply side of the market there are currently constraints with a shortage of listings and inventory of property on the market below long term average as has been detailed in the NZ Property Reports through most of the second half of last year, however this is likely to ease as more listings are coming onto the market as cited by the rise through February. Sadly the parallel data for supply side for the period of 1998 to 2006 is not available. It is only with the advent of the web as the primary means of marketing real estate have we accessed to such data through realestate.co.nz.

On the demand side the rate of sales of property is the best surrogate and the chart below provides a compelling reason to believe that “things are different this time”!

The red line tracks the current 12 month moving average sales of properties over the past 5 years matched to sales of the 5 years leading up to 2003. This is very significant. Currently sales of properties are running at a rate of just over 61,000 per year whereas leading up to 2003 and the actions of the Reserve Bank at the time, they were running at over 100,000 a year, that is a difference of 63%.

The froth in the property market which catapulted the house price bubble from 2003 to 2007 was more likely to have been driven by the highly active demand from buyers anxious to “get onto the property money train” at that time, certainly influenced by low interest rates, but not solely the action in cutting OCR. Property sales had started ramping up well before 2003, in fact sales started to rise in 2001 and kept on rising to peak at over 120,000 per year in 2004.

At this time sales are rising – certainly not as fast nor at such a frothy level. That would seem to be a very compelling part of the picture to better understand the likelihood for another property price bubble – not that likely.

 

UPDATE (3.30pm 14th March)

This article has been published on interest.co.nz as an opinion piece to complement the original opinion piece by Bernard – for this I am very grateful.

A comment has just been posted by “Basil Brush III”

“How about adjusting those wonderful graphs for the relative inflation rates of each period. I would bet Alistair Helm cannot do that and make the same statement”

Well I love a challenge so for Basil Brush III here is the key chart adjusted for inflation over the period – looks to me like the argument is even stronger that we are not likely to see a bubble!

6

NZ Property Report – February 2012

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

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

A full print version of the NZ Property Report – February 2012 is published below and is available for download (1.5MB) and distribution.

Summary of the market – February 2012

The property market across the country in aggregate has become more active in the past 9 months, in January alone sales were up 25% on a year ago and the final 3 months of 2011 saw sales up 22%. With this increasing demand the market as reflected from the supply side has been slow to respond, that is until February when listings were seen to come onto the market in a strong surge.

In absolute terms the level of new listings at 13,459 is up 18% on February last year and 14% up on a seasonally adjusted basis from January. This new rush of listings comes with a higher price expectation of sellers, eager to capitalize on what they see as a strong property market, the test will come as to whether these price expectations result in higher selling prices or if the level of buyer demand is prepared to meet these expectations. As has been noted before, this pressure in the market caused by a shortage of listing is very focused in the main cities with provincial regions still not witnessing anything like the level of buyer demand or activity as witnessed in the cities.

This new surge of listings appears in the main to be easing some of the pressure as measured by inventory levels with easing in those areas of the country feeling the shortage most significantly in recent months providing some comfort for those buyers who are eagerly waiting for the right house to come to market.

 

Asking Price

The seasonally adjusted truncated mean asking price of $426,575 for all new listings in February rose by 2.1% from January. This is a new record level for asking price up from the prior peak of $425,936 reached in October last year. The trend as seen in the chart covering the last 3 years shows a degree of accelerated growth in asking price over the recent 12 months as compared to 2010.

 

 

New Listings

The level of new listings coming onto the market in February rose sharply with a total of 13,459 new listings coming onto the market. This represents a seasonally adjusted rise of 13.5% from January and is up 18.1% as compared to February last year.

On a 12 month moving average basis a total of 127,054 new listings have come onto the market since March 2011 as compared to 133,883 in the prior 12 month period, a fall of 5.1%.

 

Inventory

The level of unsold houses on the market at the end of February (47,058) was up marginally as compared to January (46,976) as measured on a seasonally adjusted basis. This total includes houses, apartments and lifestyle properties on the market. However as a function of the increasing level of sales over the past 6 months, the inventory as measured in weeks of equivalent sales has fallen again from 36.4 weeks in January to 36.0 weeks in February. This compares to an inventory in February last year of 48.7 weeks, a fall of 26% in a year.

 

Regional Summary – Asking price expectations

The national (seasonally adjusted) truncated mean asking price expectation among sellers rose significantly to a new high of $426,575 in February.

Following the new record high for the national figure of asking price, both Canterbury and the Central North Island posted record highs. In the case of the Central North Island this is the highest asking price since October 2008, for Canterbury the pressure of listings shortages continues to put pressure on asking price.

Around the rest of the country 11 regions showed rises with Nelson the largest rise of 15.3% as compared to prior month on a seasonally adjusted basis. A total of 8 regions reported seasonally adjusted falls with the West Coast and Taranaki posting large falls of 8.4% and 7.3% respectively.

As has been seen in recent months the main three metro centers of Auckland, Wellington and Canterbury reported continuing rises in asking price.

 

Regional Summary – Listings

The general picture across the country for February was for a significant rise in new listings. Only one region, the Coromandel reported lower number of listings in February this year as compared to last year – down 19%. The remaining 18 regions reported rises of single digits right up to a massive 51% rise in Marlborough and 55% in Gisborne, with many regions reporting 30+% increases.

The tightest markets of the past 6 months being the major 3 cities saw some degree of pressure easing on limited supply as Canterbury saw a 31% rise with over 1,500 listings, however Auckland saw only a 16% rise and Wellington 10% rise. These increases do not match the year-on-year increase in sales which in January for Auckland was 28% and Wellington 18%.

 

Regional Summary – Inventory

The inventory of unsold homes on the market tightened again in February marginally slipping down to 36.0 weeks of equivalent sales from 36.4 weeks on a seasonally adjusted basis.

The change which has been witnessed over the past month has been to a more balanced market in many regions. As judged by the relative inventory to long term average, 7 regions are identified as being sellers markets with just 4 being buyers markets, leaving the remaining 8 as balanced markets favouring neither one party over the other.

The most extreme market pressure continues to be felt in the Canterbury and Auckland markets, but also in the Waikato and the West Coast, all of which are seeing levels of inventory when judged on rate of sale basis well below long term average. A noticeable change in February was the fact that in all 3 major cities the actual inventory level in weeks of equivalent sales and physical inventory did rise thereby showing that the market is responding the demand and shortage of supply.

 

Lifestyle

Lifestyle property listings rose sharply in February reflecting the general property market. A total of 1,048 listings came onto the market, up 12% year-on-year and up 65% as compared to January. The truncated mean asking price for these listings rose by 10% as compared to the recent 3 month average to $643,647 – a new record high in asking price, surpassing the last peak of Feb 2009 at $633,811.

Across the country, four regions also recorded new peak asking price – Waikato, Hawkes Bay, West Coast and Canterbury.

 

Apartments

Listings for apartments rose sharply in February with 538 being brought to the market, a rise of 88% as compared to January and 13% up on February last year. The truncated means asking price rose significantly from $349,736 in January to $402,278 in February, a 10% year-on-year increase and up 8% on the recent 3 month average.

The Auckland apartment market also witnessed a strong month with 329 new listings coming onto the market, up 84% from the very low level of January and up just 2% on February last year. The truncated mean asking price rose sharply to $390,021 from $314,757 in January representing a 20% year-on-year increase and a 14% increase 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 13,459 new listings in the month of November, a total of 730 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.

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 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 February 2012 can be downloaded here (1.5MB 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 2012 will be published on this website on Sunday 1st April 2012 at 10am.

 

 

 

4

The property market’s tightness of new listings may soon be over

Posted on: February 19th, 2012 | Filed in Buying / Selling a home, Featured

The consistent message through the past 6 months for the supply side of the property market has been a shortage of listings. That shortage is likely to ease in the coming months.

This forecast is based on extensive analysis of the property market cycles of sales and new listings – the two key metrics which reflect the demand and supply side of the market.

The property market as with most markets moves in cycles. The recent 5 years has seen a significant re-adjustment, as the heady days of the early part of the last decade when property sales topped 120,000 in a year, have been replaced by the more sobering reality of a market seeing in the past 12 months sales of just 60,000 properties.

The property market as reported in the monthly NZ Property Report is very much influenced by the levers of supply and demand. Through the comprehensive data from the Realestate.co.nz website we have been able over the past 5 years to track the supply side of the market – the number of new listings that come onto the market each month. Matched to this, is the demand side which is reflected by the number of property sales per month as reported by the Real Estate Institute (REINZ).

Looking back over the past 5 years, in an average month around 11,500 new property listings come onto the market whilst around 5,200 properties sales are transacted on average per month. The balance of new listings either remain on the market thereby adding to the existing inventory as property takes longer to sell, or in the majority of cases properties are withdrawn to perhaps be relisted later.

Recent analysis we have undertaken shows that the cycles of property supply and demand does not follow in perfect alignment. The chart below has been developed by tracking the 12 month moving average of new listings and sales from the start of 2000 to the end of 2011 in the case of sales (blue line) and the past 5 years since 2006 in the case of listings (red line). It clearly shows the similarity of cycles, but equally shows a timing delay as the listing’s market lags the sales’ market.

(Note: the chart has different vertical axises – in the case of sales: 3,000 to 11,000; whereas for from 8,000 to 18,000. This presentation has been chosen to provide an alignment of the data points to better highlight the correlation between sales and listings)

Looking at this most recent 5 year period, the supply side cycle tends to lag the demand side cycle by around 6 months. That is to say that the actions of sellers seeking to list their property tends to lag the ups and downs of property sales. This is highlighted by the horizontal arrows tracking each of the peaks and troughs of this 5 year period.

This would infer that sellers judge their intent to list a house by a view of the level of recent sales – probably witnessed by “Sold” signs and media commentary. This lag is likely to explain why the market often gets over supplied even after sales have slowed; and as we have seen recently, sales are picking up whilst new listings remain low.

This current situation where property sales are rising faster than new listing is shown on this chart by the blue line intersecting and rising ahead of the red line of listings has occurred once before,albeit for a short time in 2009. That occurrence as a fall out from the global financial crisis lead to a significant build up of inventory as sales fell sharply through 2010.

So having undertaken this analysis I expect that the next question on everyone’s lips will be “Given that the analysis shows a correlation and a distinct cycle – what can this tell us about the expectations for 2012?”

The chart below takes a view based on some core assumptions as to how the next 12 months may look.

The first assumption is that the trend of property sales is likely to continue, albeit at a modest pace. In 2011 just over 60,000 properties were sold, for 2012 a 12% increase would see sales of 69,000 – a level that based on the historical long term average would not be too optimistic. With this slow rise in sales the likelihood is that the current rate of new listings will rise to a higher level as has been shown to happen in the past reflecting that 6 months lag effect. This extrapolation as shown in the chart would see around 142,000 new listings in 2012, up 15% from the 2011 all-time-low of 124,000.

 

 

 

0

Property sales on the rise, whilst listing still in decline

Posted on: February 7th, 2012 | Filed in Featured, Property Pulse - Regional Market Report

Through the last 2 quarters of 2011 the rate of property sales in NZ continued to grow; reaching a 22% year-on-year increase in the final quarter, whilst at the same time total new listings were down 1%.

This is the summary of the Quarterly Property Pulse complied from Realestate.co.nz listings data and REINZ sales data. The chart below details the year-on-year growth or decline for each 3 month period through the whole of 2010 and 2011.

Around the country the 19 regions show some degree of variations as summarised in the specific chart for each region.

1

NZ Property Report – January 2012

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

The January 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 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.

A full print version of the NZ Property Report – January 2012 is published below and is available for download (1.5MB) and distribution.

Summary of the market – January 2012

The new calendar year starts with low levels of inventory of properties for sale on the market which is matched by a sluggish flow of new listings, which is then meeting a rising demand in the rate of sale which is up 22% for the past 3m months as compared to the same period last year. This scenario is most extreme in the 3 key regions of Auckland, Wellington and Canterbury which this rise in sales has driven the inventory levels to the lowest levels of the past 4 years – spanning a period when the property market has seen very lackluster activity.

Historically the supply side of the property market tends to lag the demand side as measured by sales and it is likely that the coming two months of February and March will see heightened activity in new listings as the property market hits the peak of activity over these summer months.

The data for this month’s report and going forward all future reports reflects the seasonally adjusted data for asking price expectation and inventory. The seasonal adjusted data better presents the true trends in these key metrics as it removes the inherent seasonality of the property market. The computation of this seasonally adjusted data is provided with the assistance of the New Zealand Institute of Economic Research (NZIER) and uses a X12 ARIMA methodology to calculate seasonally adjusted data.

Asking Price

The truncated mean asking price of $417,740 for all new listings in January now calculated on a seasonally adjusted basis fell 0.5% from December. The past 3 months has seen a progressive easing from the peak in October of $425,936 – an adjustment of 2%.

Despite this recent fall the long term trend is showing an increasing asking price albeit at a rate of just 1% per year.

 

New Listings

The level of new listings coming onto the market in January fell on a seasonally adjusted basis by a significant 12%. A total of 8,542 new listings came onto the market representing a very modest 3% year-on-year rise.

The continuing trend of the past 12 months is to a lower level of new listings – the past 12 months has seen just under 125,000 new listing as compared to 137,000 in the prior 12 month period.

 

Inventory

The level of unsold houses on the market at the end of January was up slightly as compared to December at 46,967 as measured on a seasonally adjusted basis. This total includes houses, apartments and lifestyle properties on the market. However as the rate of sale has picked up over the past 3 months leading up to the end of 2011, the inventory as measured in weeks of equivalent sales has fallen from 37.5 weeks in December to 36.4 weeks in January

 

Regional Summary – Asking price expectations

The national (seasonally adjusted) truncated mean asking price expectation among sellers eased again in January to $417,740.

Despite this national easing in asking price there were just 5 regions across the country that reported a fall in seasonally adjusted asking price. Most noticeable was the Central Otago/Queenstown Lakes and Nelson region which both showed double digit falls. Against this backdrop all of the price rises were of a smaller scale and reflect in the other 14 regions.

Auckland, the largest region of the country saw asking price fall by 1% to $540,187 – a consecutive 3 month fall since the peak of October 2011 at $560,327. Wellington asking price rose 2.9% to $444,900 and Canterbury up 0.6% to $374,123 – this latest asking price is fast approaching the peak of $374,952 last seen in January 2008.

 

Regional Summary – Listings

New listings movement across the country between December and January was in most regions fairly modest. There were 6 regions from the 19 that showed falls with Gisborne and the Wairarapa showing the biggest falls 21% and 20% respectively. Both of these regions have been experiencing high levels of inventory and this market reaction may well edge them back towards a more balanced market.

In contrast across the 13 regions that saw increases most saw modest single digit growths.

The Taranaki and Central Otago/ Queenstown Lakes both showed significant double digit growth in listings – the latter being a region which is beginning to see a buyers’ market emerging as inventory continues to rise.

 

Regional Summary – Inventory

The inventory of unsold homes on the market tightened again in January slipping down to 36 weeks of equivalent sales nationally. These figures now reflect seasonally adjusted data.

The majority of regions still favour sellers – 9 of the 19 are seen as sellers markets, with just 3 regions being categorized as buyers markets – Gisborne, Wairarapa and Central Otago/Queenstown Lakes .

The physical inventory of property on the market as measured on a seasonally adjusted basis is the lowest for the month of January since 2007 and as such represents a clear view of the tightness of the market. The market for the coming months will be very interesting to watch as transaction levels growing as the market hits the peak period of February and March.

 

Lifestyle

Lifestyle property listings in January at 634 listings was the second lowest month of the past 5 years – only marginally beaten by July of last year with 628. This level of new listings represented a 25% fall from December and a 13% fall from January last year. On a seasonally adjusted basis listings recorded a 34% decline from December.

The truncated mean asking price for lifestyle properties rose 13% in the month of January to $620,831 and represented a 15% year on year growth. Peak prices were seen in both Canterbury ($661,237) and the West Coast ($553,375).

 

Apartments

New listings for apartments fell to their lowest level in the past 5 years in January that despite a record low in December. Just 286 apartments coming onto the market, this reflected a 21% year on year fall. The truncated mean asking price of $349,736 was down 3% from January last year and 12% down on December.

The Auckland market which dominates the apartment market saw a record low level of new apartment listings with just 179 new listings in January which was down 9% on prior month and down 25% down on last year. The asking price was $314,757 which was down 8% on last year and 13% down from December.

 

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 1,000 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 8,542 new listings in the month of November, a total of 292 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.

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 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 January 2011 can be downloaded here (1.5MB 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 2012 will be published on this website on Thursday1st March 2012 at 10am.

 

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