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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 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

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

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.


Taking the property pulse of the market – February 2010

Property Pulse 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.


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


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.


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.


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.


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.


Transitional market

Posted on: February 13th, 2008 | Filed in Market News

Greetings again – There has certainly been alot of media attention towards the state of the New Zealand housing market with predictions of doom and gloom becoming the norm. In my opinion, alot of this has been taken in reflection upon the rampant market boom of the last 6 years, when in reality we are just returning to a normal balanced market. Statistics do tell facts and things have slowed down with houses taking longer to sell, but generally if a property is priced well and presented and marketed to the right people then a great result can still be achieved. It can actually be a great time to get to the next property rung on the ladder, because if you are buying and selling in the same market then to upsize is comparatively cheaper ie if prices drop 5%,  a $300,000 house equates to a $15,000 fall where as a $400,000 house means a $20,000 drop. Fortunately for we Wellingtonians our market is fairly stable historically with enough government activity generated in our public sector to keep our local economy  and the housing market moving ahead.

I am interested to see this shared equity scheme the Government is rollling out in July and what effects it will have for the market and response from first home buyers.

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