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Archive for the ‘Market News’ Category

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Mortgagee listings continue to ease

Posted on: April 4th, 2012 | Filed in Market News, Media commmentary, Money Matters

The front page story of the NZ Herald highlights the anguish and horror of the impact of mortgagee sales upon the owners of properties reprocessed by the mortgagee – in this case the bank. Behind the headline is the statistics that the scale of the mortgagee listings being brought to the market to be sold on behalf of the owner by the bank or other lender is on the way down.

At the peak of the financial crisis the number of properties being marketed as mortgagee sales hit 423 across the country, that was back in November 2008, today that number is 216. Currently around 30 properties a week are marketed as mortgagee sales, and given the financial imperative of the bank or financial institution the properties tend to sell fairly quickly seeing properties not hanging round long on the market.

The chart below updates the last 5 years of data and graphically shows the steep rise at the start of the global financial crisis and the slow steady recovery since then.

In real terms each property put up for mortgagee sale is a human story about over leveraged financial management, but in absolute terms the number of mortgagee properties in NZ remains relatively low when judged against the property market in general. At no time over the past 5 years has the number of mortgagee properties on the market in NZ ever exceeded 1% of all properties being marketed – at its worst mortgagee properties represented just 1 in 132 of the properties on the market. Compare that to the US where although things are looking brighter the story a year ago from Bloomberg showed 3 million homes foreclosed since the start of the crisis (for reference US house sales are around 4 million a year).

One way to evaluate the current tracking of mortgagee listings in NZ is as shown below matching week by week for the past 5 years the % of mortgagee listings of the total of all listings.

This chart tracks in red the current year and shows that weekly this year is looking to be at a similar level to 2010, far lower than the worst year of 2009 and down on last year. The reason for the somewhat higher level of listings last year could well have been as a result of banks looking to liquidate their repossessed properties as the property market began to regain life and activity.

 

Regional Variance

One noticeable trend within the data of mortgagee listings is the split between the major metro areas of Auckland, Wellington and Christchurch and the provincial ares of the country.

The blue line tracks the listings in the major cities with the red showing provincial areas. As the financial crisis hit the early impact was seen in the cities (potentially in the area of apartments and investment properties) whereas as time has gone on the provincial areas have actually been creeping up and have in the past 3 months overtaken the cities to represent a higher percentage of current mortgagee properties on the market.

This week the region with the highest proportion of mortgagee properties is the Hawkes Bay where there is one mortgagee property for ever 123 properties on the market (0.81% of all listings) – a total of 17 properties; by contrast Taranaki, Nelson, West Coast and Otago had just one mortgagee property each on the market.

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The mortgagee hangover

Posted on: November 16th, 2011 | Filed in Featured, Market News

The headlines keep reminding us that we are still globally mired in what can be thought of a global economic doldrums. Europe seems perilously close to some form of collapse or at least a “lost decade” and as ever when one of our major trading partner sneezes we tend to catch a cold.

At this time, one of the measures of this – what might be thought of as a long term hangover is mortgagee sales. Those properties where for whatever reason the property owner fails to meet their obligation with the lender and proceedings ensue whereby the lender (in the main, high street banks) seek to repossess the property and auction it off as a “mortgagee sale” to recover the debt owed on the property.

This sector of the NZ property market is a background condition in boom times as well as in bust times, it just tends to be that bust times tend to raise the levels of mortgagee properties being brought to the market. Over the past 4 years this has been very evident as the chart below highlights.

At the peak of the global financial crisis in 2009 the number of mortgagee properties being marketed peaked at over 400 properties in the market and in that year a total of 2,231 mortgagee properties were placed on the market. That compared to just 571 in the whole of 2007 (pre GFC). In 2011 so far 1,535 properties have brought to the market as mortgagee listings by lenders seeking to liquidate the asset.

At this time on the market there are 396 properties being marketed by real estate agents as mortgagee properties. As mortgagee properties are not a defined category our data set relies on the use of the term mortgagee to identify such properties.

As stated this continuing prevalence of mortgagee properties on the market is a bit of a legacy hangover – a legacy we seem unable to shake. Examining year on year data as the chart below shows, the fact is that 2011 is actually worse than 2010 when judged on the perspective of the percentage representation of mortgagee properties on the market as a proportion of all properties being marketed.

The scale of the NZ mortgagee property hangover is though somewhat modest when compared to other countries, most notably the US where still some 3 years after the GFC as a result of the sub-prime mortgage fiasco mortgagee sales (foreclosures as they are called) are estimated to still total 2.1 million properties and by some estimates will take a decade to clear, by comparison NZ mortgagee listings have never represented more than 0.75% of all listings or less than 0.5% of total sales.

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Keeping up to date with the property market

Posted on: January 26th, 2011 | Filed in Featured, Market News, Real Estate Industry, REINZ Monthly data

Perfect image of houses croppedIt is late January and I must admit the Unconditional blog has been a bit quiet for the past few weeks as an extended vacation has meant I have not addressed an update on the NZ Property market.

Well, now back firmly in the chair,  I intend to address this issue by providing some key facts of assistance to any prospective buyer or seller as well as those fond of keeping a close eye on the property market.

The first data of 2011 will be published next Tuesday, the 1st of February when the NZ Property Report from Realestate.co.nz is published. The data will detail the level of activity of new listings coming onto the market in the first month of this new year. Suffice to say at this stage it is looking to be pretty quiet as far as new listings are concerned.

Closing out 2010 data from the Real Estate Institute showed sales in December of 4,397 properties, this was though up a seasonally adjusted 7.1% from the November sales; which itself was up a seasonally adjusted 23% from October.

However despite this recent pick-up in sales the total sales in the full calendar year were just 56,303. This figure is a mere 175 properties more than the lowest year since recording data back to 1992 (that prior lowest was 2008). It is very clear from the chart below the new levels of property sales of the past3 years since the turning point in the market.

NZ Property sales each year 1992 to 2010 REINZ Realestate.co.nz

Whilst the calendar year data shows the big picture it is inadequate in highlighting trends. For this I favour the seasonally adjusted monthly sales tracking as detailed in the chart below tracing the past 5 years by month since January 2006.

Seasonally_adjusted_monthly_sales_to_Dec_2010

In separating key periods I have tried to highlight the trends. The start of 2006 saw a fairly stable period for well over a year, right up to the turning point in the market in early 2007. The next year saw a significant fall to late summer 2008. Then followed a 9 month period of stability – a sense of adjustment before a resurgence occurred through a 7 month period in mid 2009. Unfortunately that resurgence ran out of steam as Spring 2009 appeared and the market has subsequently been sent backwards for the next 12 months.

To call a turning point is risky, but the chart does show some favourable signs through the past 3 months. As ever it is better to reflect after 6 months than just one quarter.

Sales volumes are a key indicator of the health of the market from the perspective of activity (as without buyer you have no market!). The level of demand is often best represented by price movements and to close out 2010 it is worth looking at what the trends are for property sales price. Using the Stratified House Price Index provided by the Real Estate Institute in consultation with the Reserve Bank as the measure, the chart below tracks the national price over the past 4 years.

Stratified_price_-_Dec_2010

The December stratified median price was $360,660 down from the November levels and as shown from the chart, down 5.3% from the peak price in the market back in November 2007. The selling price over the past 12 to 15 months has been tracking in a very narrow band from $370,000 to just below $357,000, there does appear to be a slight decline, but given the split axis this trend is very slight and it might be better to call these prices stable. Which when set against global property price movements of the past couple of years would be seen as favourable by the more optimistic among those property watchers.

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L J Hooker acquisition of Harveys propels them to 3rd largest group

Posted on: November 4th, 2010 | Filed in Featured, Market News

Harveys_and_L_J_Hooker

It was announced today that L J Hooker is acquiring the real estate business of Harveys Real Estate.

Both L J Hooker and Harveys are franchise groups with L J Hooker operating 53 offices in NZ coupled with a further 642 offices across Australia and Asia. Harveys on the other hand is a NZ company with 38 offices.

The acquisition is a complementary fit as the two companies do not overlap regionally, with Harveys strength in the Auckland, Waikato and through the Central North Island whilst L J Hooker has a good coverage especially in the South Island where Harveys is not really present.

The move will leapfrog L J Hooker from the 8th biggest group by number of offices in NZ to the 3rd largest player with a combined 91 offices as the charts below show.

NZ_real_estate_market_by_offices_Oct_2010

As the industry adjusts to the current level of sales which this year is heading for around 60,000 sales as compared to 70,000 last year, and compared to 100,000+ in each of the years spanning 2002 to 2006, the pressure on margins and overheads will and have already lead to closures of some offices and industry consolidation. As ever under such pressure there will always be opportunities for those well capitalised companies to take advantage to grow market share through marketing or acquisition. This move by L J Hooker is just such a move. It will be interesting to see if this is the only development or if we will witness others in the coming months.

The likely result of this acquisition will see a rebranding of Harveys offices as L J Hooker thereby leveraging the brand franchise as operating two separate brands provides no beneficial economies of scale in marketing.

As a point of disclosure both L J Hooker and Harveys are both shareholders in Property Page (NZ) Ltd which owns 50% of Realestate.co.nz Limited.

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September 2010 Property market video – Realestate.co.nz

Posted on: October 15th, 2010 | Filed in Buying / Selling a home, Featured, Market News, REINZ Monthly data

Video image header for blogThe latest statistics from the Real Estate Institute for September, providing insight into the residential property market are presented in this video.

The key charts to accompany the video are provided below:

The sales analysis of the 3 key metro areas highlights the impact of the Canterbury earthquake on sales in the region. The flat property sales market in Wellington is contrasted with a rise in sales in Auckland of 12%. The sales figures are seasonally adjusted to allow comparable month by month comparisons.

Key_regions_sales_Sep_2010

The Stratified price for the total of NZ shows the extent to which prices have continued to slide over the past year since November last year when they had recovered some of the early falls after the peak in mid 2007. The current stratified price across the country is $359,555.

NZ_Strat_price_Sep_2010

The Auckland property prices have risen sharply in September to $487,800 to edge closer to that long term peak of July 2007, currently that differential is 4.4%.

Auckland_Strat_price_Sep_2010

The Wellington property prices continue to see some weakness with the stratified price down in the month to $403,595 which is 4.3% below the peak of the market just under a year ago.

Wellington_Strat_price_Sep_2010

The Christchurch stratified property price continued to show weakness. It is likely that the impact of the recent earthquake and the resultant fall in sales could impact reported prices and the state of the market. For the month of September the stratified price was $330,750. This level represents a level 6.7% below the peak of the property market in the city back in October 2007.

Christchurch_strat_price_Sep_2010

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Seasonally adjusted property sales

Posted on: June 5th, 2010 | Filed in Buying / Selling a home, Market News

The release this week of the May NZ Property report provided us here at Realestate.co.nz with the opportunity to update one of the key measures of the report – the level of inventory of unsold properties on the market. We have chosen to switch to quoting seasonally adjusted, rather than raw data. This was prompted by review meetings with economists, whose recommendations, I certainly take on board.

However I was approached a couple of times this week to be questioned why we had taken this route when seasonally adjusted data can be seen as “smoothed” or at worst “manipulated”. The view put forward, was that it was best to state the facts and let people make their own assessment. My answer to the question was in some ways supporting and in someways opposing. The NZ Property Report does publish actual data of new listings coming onto the market in the past month as well as actual asking price. The decision to make the inventory stats seasonally adjusted is that it is a calculation, based on actual inventory and actual sales. The issue is that there is a timing factor in the sales data, whereby the two sets of data are out of alignment.This has the potential to distort the inventory statistics.

Reflecting after these questionings I was drawn to want to share some insight behind the differences between actual and seasonally adjusted data. So I have taken the opportunity with the latest Barfoot & Thompson data for May to cast some light on the subject in order to assist greater understanding.

The report from Barfoot & Thompson highlighted the “rise in sale volumes to 792 in May, up on April’s 671 deals but still well behind the year’s peak in March of 927 deals”. These are the actual sales levels, by comparison the seasonally adjusted data shows that May sales were 745, up on April which was 723 and also up on March at 712, in fact the first 5 months of 2010 has seen a steady albeit very slow rise month on month of sales (seasonally adjusted) for Barfoot and Thompson as the largest real estate company in the Auckland region. The chart below shows this particularly well. The critical fact is that by seasonally adjusting the data allows for a true like-for-like comparison between one month and the next.

Barfoot & Thompson seasonally adjusted sales 2010 Realestate.co.nz

The calculation of seasonal adjusted sales in this case is made using Barfoot & Thompson own data for the past decade. The inescapable fact is that the property market does move in seasonal cycles through the year, added to the ever present reality that there are different number of days per month which will naturally effect sales numbers.

What is interesting is to look at the seasonal factor for the Barfoot & Thompson data represented in the chart below. Clearly March is traditionally the biggest sales month with nearly 11% of all annual sales whilst December languishes with just 6.5% of sales – in theory an average month would be 8.3%.

Barfoot & Thompson seasonal sales 2000 to 2009 Realestate.co.nz

Looking at these statistics reinforces the assertion put forward in a prior Unconditional post that Summer may not be the best time to sell a property; because as you see the level of winter activity is pretty consistent, the 5 months through June to October represent a a steady 8.3% average – equal to one twelfth of the annual total.

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Taking the property pulse of the market – February 2010

Posted on: February 18th, 2010 | Filed in Featured, Market News, Property Pulse - Regional Market Report, REINZ Monthly data

Property Pulse Realestate.co.nz Today was the start of a new regular slot on TV3 Business Breakfast for providing a mid month view of the property market. For those readers who were not up at 6.40am you can view the segment here on the TV3 website.

The key data presented in the report covers the latest Real Estate Institute sales figures for January as well as latest data on website listings.

Sales

The sales in January were very low. Just 3,666 properties were sold in the month. These sales were lower than many had anticipated, especially when compared to a year ago – a time you have to remember when the storm clouds of the recession were depressing all forms of consumer activity and confidence – in that month a year ago 3,706 properties were sold. So this placed January 2010 as the lowest month going back as far as 1992.

The chart below tracks the past 5 years and uses seasonally adjusted monthly sales data. The key periods of the past 5 years are highlighted to track the key events – STRONG MARKET 2005 – mid 2007, MARKET FALL mid 2007 – early 2008, FLAT MARKET in 2008, RESURGENCE AND FALL in 2009.

NZ Seasonally adjusted property sales 2010

On a seasonally adjusted basis the January 2010 sales volumes were not quite the lowest month, but they came pretty close.

Sales Price

The Stratified median sales price for January as reported by the Real Estate Institute in association with the Reserve Bank showed a further fall to a level of $360,687. Down from $366,500 in December which itself was a fall from November. The stratified median price as shown in the chart below is still some 5.3% below the market peak last seen in November 2007. The resurgence of houses prices seen through 2009 when the price came within 2% of the peak has certainly lost steam – certainly low sales volumes has the ability to apply a downward pressure on prices.

NZ Stratified house prices 2010

Listings

The most recent NZ Property Report for January highlighted the rise in the inventory of unsold houses from 34 weeks in December to 40 weeks in January. With this latest set of data reporting a further slowing of sales volumes added top which is a strong flow of new listings; that level of unsold inventory will likely rise again significantly for the February report – I suspect we will see a level around 48 weeks.

Taking the latest pulse of the market looking at the flow of new listings coming onto the market – the fact is that February is going to be the month which a lot of people have been expecting for a while – 18 days into this short month we have already seen over 9,500 new properties hit the market. To put this in context last February saw 12,164 new listings – we are seeing a daily rate of close to 700 and with 7 more business days we could see over 14,500 for the month.

The NZ Property Report for February will be published on Monday the 1st March on this site and will provide a national as well as regional view of the property market as seen from the perspective of new listings, asking price expectation and inventory of unsold houses.

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Has winter arrived?

Posted on: June 9th, 2008 | Filed in Market News

As one of the hardy souls who attended the All Blacks vs Ireland game on Saturday it certainly felt as though winter has arrived. This was affirmed yesterday whilst running an open home in Broadmeadows with a magnificent backdrop of snow-covered hills beyond Wellington Harbour.

The Saturday property section in the Dompost was noticeably thinner than past weeks which can mean a couple of things. Either vendors have run out of advertising money to keep marketing their property week after week (because the price does not meet the market) or vendors are beginning to withdraw properties from the market that are not saleable.

I am leaning more towards the latter reason which will be a positive move in the current marketplace as I have mentioned in past posts we have an over-supply scenario. This may start to balance things out again depending if buyer activity remains steady as it has been over the last few weeks.

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April Sales Stats

Posted on: May 28th, 2008 | Filed in Market News

This morning I have been looking back over sales statistics for Wellington and although I don’t consider myself a qualified statistician there were a few interesting points to be noted. Sales Wellington wide have certainly dropped in volume with April bringing the lowest figure in the last 12 months. In light of this however the median sale price has remained relatively constant evening out at $375,000 in April. The most notible increase has been days on the market creeping out to 42. This is really representative of the current pricing issue vendors face – with so many properties for sale the price has to be competitive or the property will remain on the market unsold.

Breaking sales down further within the Wellington region also makes interesting reading as certain suburbs out perform others. The western suburbs have shown the greatest resistance to the current market environment with a median sale time of 28 days and the median price hold around $505,000. This shows there is still fantastic demand for properties from Wadestown to Karori.

In brief, often the general public are delivered fairly ambiguous information on the housing market and nationwide statistics are used. These figures can not accurately reflect what is going on in specific areas and it would be wise to further investigate yourself. The internet can be a very powerful tool for such research and will allow you to make better informed decisions. Let me know if you’d like some more specific information on a particular area and I can post some relevant figures for you.

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What is all the fuss about?

Posted on: May 20th, 2008 | Filed in Market News

Greetings, there has been alot of fuss out in the market over recent months with predictions of doom and gloom. This has been fuelled partly by the media but the market has been well due for a correction and this is perhaps what is now taking place – a natural correction.

Being out in the market place every day of the week you get a good grasp on what buyers are thinking and feeling. Our feedback has been people are sitting on their hands because they believe prices will drop which is happening. In the last couple of weeks we have seen life coming back into the local market with interest rates coming back a few points and prices easing. Part of the problem has been an over-supply of properties and what will be evident in the coming months is the vendors who do not need to be on the market will come off, prices will adjust accordingly, and things will settle down. Investors are certainly starting to come out of the wood work and snap up good deals often beating owner occupiers on good properties.

It is certainly interesting times and the market is shifting weekly and for the buyers who put in the effort and keep their finger on the pulse – the rewards will come.

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