The Unconditional Blog

The impartial voice of the industry

 

Archive for the ‘Media commmentary’ Category

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NZ’s fascination for property comes alive through reality TV (Updated 20 Aug)

Posted on: August 14th, 2012 | Filed in Featured, Media commmentary, Website news

The Australian reality series “The Block” is certainly being warmly embraced by the kiwi’s who are according the weekend papers camping out in their lounges on Wednesday and Thursday nights to watch the latest weekly challenges for the willing and able group of 4 couples. Ratings have seldom been as good as for this series with audience shares around 30% of 25 -54 year olds.

The format I don’t need to explain, nor do I need to reference the fact that the competition seems to be more about couples and the reality TV component than it is ever about DIY, but that is not important – people love to watch others toil in DIY work just as they have done, only this time they can laugh and kick back on the couch.

The series is well advanced and in real life the houses are finished and prospective buyers are being given private tours. As the properties are now “on the market” our role at Realestate.co.nz as the official website of the real estate industry really comes into its own to promote and advertise these 4 properties online and on mobile.

We decided we would do all we could to assist the sellers find the best buyers so we have upgraded all of the 4 property listings on our site on behalf of our customer Bayleys Real Estate Ltd to a full premium campaign to maximise profile and traffic online. In addition we have featured the properties on our Facebook page with links to the listings and the opportunity for comments and likes to provide feedback.

As you can see from the extent of the viewings of these properties online – they are very popular with over 8,000 views in just the first 4 days across the 4 houses, that total was surpassed with over 9,000 views on Monday the 13th alone!

In addition to promoting these houses we thought it would be fun to do a poll to see just how people are judging the houses and the teams. The poll was set up on Friday on our Facebook page and is already showing some clear favoritism towards Libby & Ben who are way out in the lead in terms of votes.

The properties go to auction live on TV3 on Thursday 6 September – over the next 4 weeks we will track the performance of the viewings for each house as a surrogate for the voting; we will also combine this with the Facebook poll to come up an aggregate scoreboard which we will update regularly.

Here is the result after 5 days – a clear lead for Libby & Ben. Check back on this page over the next days to see how things progress.

Update 15th August

The performance of these listings is demonstrating the connection between TV and social media. In the space of just 2 days the viewing total of the 4 houses has gone from 17,499 to 31,487 – an extra 14,000 viewings in just 2 days! The NZ Herald ran an article on this phenomenal interest headlined with me quote of ‘mindblowing’ in the context of this scale of traffic. Key to driving this incremental traffic is the profile we have given these properties on Facebook and the comments that are engaging people around discussing these properties.

As the weeks go by more and more of the images of these houses are being posted to the website of Realestate.co.nz. As well as over 20 photos per listing we also now showcase interactive floor plans. Check out the latest images:

This incremental traffic and the added votes on our poll on Facebook has not made a huge difference to the voting sentiment of the public of NZ. As the chart below shows Libby & Ben are still way out in front – although slipping 2 percentage points, Rachael and Tyson have edged up by 1 percentage point to snap at the heals of Ginny & Rhys for the #2 spot.

Update 20th August

The weekend saw a further surge in viewings for these properties taking the total viewings to over 41,000 since the listings went live. Further voting on the Facebook poll covering both overall and the views of the kitchen has taken Libby & Ben further out in front, now with 45% of the sentiment from the public. This gain has come at a cost to Sarah & Richard (slipping from 17% to 15%) and Ginny & Rhys (21% to 19%). Buoyed along by a surge of sentiment Rachel & Tyson have increased from 20% to 22% to overtake Ginny & Rhys to take second place.

 

 

3

Mortgagee stress in the NZ Property market?

Posted on: June 11th, 2012 | Filed in Buying / Selling a home, Media commmentary, Money Matters

We seem to have a difference of opinion according to the newspapers recently. The NZ Herald had a front page story titled “Mortgagee sales: Landlords feel pain” in which the author quoting the latest mortgagee sales stats from Terralink, says that these figures “challenge” the stats from Realestate.co.nz that “claims” that foreclosures are declining.

So what is the truth. Are mortgagee sales declining or increasing and which data is right? The fact is both companies and both sets of data are right. It all comes down to the understanding of the different data sources and the interpretation of that data.

To provide clarity let me present both sets of data.

Mortgagee Sales

Terralink International provide a report detailing the sale of properties classed as mortgagee sales. They collect this data from LINZ (Land Information NZ) which as a government organisation is charged with registering title changes. Terralink has been analysing this data and identifying sales as those where the vendor is a bank or financial institution. That being the case when a bank has re-possessed a property where the owner has forfieted the right of ownership when the mortgage payments have been failed to be paid.

Terralink report that in 2011 2,265 properties were sold where the vendor was a bank or financial institution. On a quarterly basis the sales are shown below. The last reported monthly stats from Terralink were reported in June 2010.

As the data shows the peak of sales were in 2009 with a total of 3,024 in the year. Certainly the first 3 months of 2012 was up significantly on the first quarter of 2011 or 2010.

An important note in regard to this data set is that sales are recorded at the date the title change is registered with LINZ. In the normal course of property transactions legal title change must be registered within 3 months from settlement date (although many lawyers these days file online transfers on the day of settlement), therefore it is quite possible that sales recorded by Terralink from LINZ data relates to properties advertised as mortgagee sales anything up to 6 months earlier, even as far as 9 months earlier. That could mean that within the 524 sales for Q1 2012 there could be property that came up for mortgagee sale anytime in the second half of 2011 potentially.

 

Mortgagee Listings

Realestate.co.nz has been recording the data of mortgagee listings on its website since the beginning of 2007. The data has been presented in regular reports on Unconditional. The data is the weekly number of properties advertised on the realestate.co.nz website which the listing agent has defined the property as being sold as a mortgagee sale or auction. There is an obligation for the agent to detail that the property is the subject of a mortgagee sale and often it appears in the headline. In the main properties being sold as mortgagee are sold quickly; as the bank, once listing such a property does not want a protracted process. This uniform listing period ensures the data of listings is a statistically valid view of properties being placed on the market by banks and other financial institutions.

As the chart below shows the number of listings being marketed as mortgagee sales at any one time peaked in 2009 at over 400 properties. Subsequently the number of listings has seen a steady decline.

As of today there are 203 properties on the market classified as mortgagee sales. As a point of note the search on the site for the word mortgagee shows 238 listings, the difference lies in the fact that some of these listings are for land rather than properties.

The key point in regard to the stats on the realestate.co.nz website is that this is recording the active market today for new listings, listing which may be completed in the next 2 months and then registered with LINZ and then appear in the Terralink stats later in the year.

 

Alignment of the two sets of data

Hopefully it is clear that both sets of data are accurate, but one shows a leading indicator of listings, whilst the other shows the following indicator of sales.

There is a point of correlation though. Looking at the last 2 months of 2011 it can be seen that there was a spike of new listings. At the time I referred to this as the continuation of the mortgagee hangover. The deduction at the time was that the increase in activity in the property market could well have fueled confidence amongst banks to list properties that they had on their books. This flush of listings may well have been transacted early in the new year as recorded sales registered with LINZ in the first 3 months of 2012, to therefore be included in the latest Terralink data.

Looking at the latest weekly data comparing week by week to prior years shows the relative activity in new listings of mortgagee properties by agents this year.

 

 

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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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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!

0

No mysterious spike in mortgagee sales

Posted on: July 5th, 2011 | Filed in Featured, Media commmentary

Mortgagee sales are still a part of the NZ property market. Currently there are 333 properties being marketed in NZ as mortgagee sales. These properties are being marketed by real estate agents on behalf of the mortgagor (in most cases the bank that loaded the money on the house in the first place).

This total though needs to be placed in perspective. There are today 49,782 properties for sale being marketed by real estate agents (excluding sections) across NZ; that means that a mortgagee listed properties represents just 1 in every 150 properties on the market.

The level of mortgagee sales as measured by the number of mortgagee listings on realestate.co.nz has been declining in the long term trend since the peak in early 2009. There has been some small ups and downs, however the chart below certainly highlights the trend over the past 4 years since the data has been collected.

In respect of this trend this chart which tracks year-on-year comparison of listings on a 3 month moving average basis shows when the emergence of mortgagee sales occurred; when the fall off from the peak occurred; and then just how steady this category has become over the past 6 to 9 months with a steady flow of new mortgagee listings coming onto the market matched to ones that have been sold.

It should be noted that the listings data only relates to properties for sale that are marketed as mortgagee sales and excludes sections. At this time there are some 113 sections which are mortgage sales.

This separation of mortgagee property from mortgagee sections in the presented data could be the reason behind the confusion of data presented in the Sunday paper article titled “Mystery spike in mortgagee sales“.

The article cited the number of mortgagee sales listed on realestate.co.nz as of last week at 435. This total would be for both properties and sections. This was then compared to a figure from October of last year of 321 listings; this lead to a supposition that listings were up 37%. (Our office was not unfortunately contacted to share the mortgagee data we track and thereby a misinterpretation occurred).

I believe that the article writer or researcher may have reviewed the article written on this blog back in October last year which detailed the then latest data of 321 listings for mortgagee properties on the market. The comparison is that the number of mortgagee properties on the market today is very nearly identical to that number on the market last October.

The data shows that there in no mysterious spike in mortgagee properties; they are still a part of the property market and from historical review tend to be a lagging indicator of the economic recessionary times that catch out home owners as unemployment and financial hardship hits home.

13

Are we seeing some signs of improvement in the property market?

Posted on: December 3rd, 2010 | Filed in Buying / Selling a home, Featured, Media commmentary, Website searching

iStock crystal ballRunning the website of realestate.co.nz gives us some valuable insight into the property market – providing us with some hard facts, some interesting statistics and some anecdotal feedback from within the industry.

One thing I am keen not to develop is a reputation as a forecaster of the property market. Firstly; one thing about forecasting is that it is likely that you will be wrong more times than you are right. People then tend to remember the time you got it wrong far more than the time you got it right – I did once make this somewhat optimistic call back in 2008 “NZ property market may well see a brighter outlook sooner” – at least I used the word “may”!

Even economists are skeptical about forecasting the property market, and they make a living from forecasting!

However I am conscious that there has been a series of recent articles that show some general improvement in sentiment. The level of mortgage approvals brought some brighter comments from Interest.co.nz as did some greater competition among the banks with competitive activity around 2 year fixed rates. In addition First National Real Estate were quick to pinpoint some upturn as did Harcourts recently. Barfoot & Thompson have also just released their sales details for the Auckland market showing a considerable pick up from October.

The data I tend keep a close watch on, are unique stats from the web – a rich vein of real time information tracking real people looking at property. The two metrics which for me reflect the level of activity are (i) number of visitors online viewing real estate and (ii) the level of email enquiry to agents, the latter being closer to a lead indicator of future activity.

Usage levels on real estate websites

The chart below tracks the indexed web traffic to a basket of real estate websites monitored by Nielsen. The data is domestic traffic only and covers all of the top 10 real estate sites online. The blue line shows the performance of 2010 measured on a 4 week moving average, with the prior years of 2008 in black and 2009 in red.

Traffic_online_to_Nov_2010

The use of an index in the chart, rather than actual traffic, effectively removes the factor of the ever growing usage of the web – more people using the web, more of the time.

The conclusion I draw from this chart is that, as we have been aware, the past 12 months has been subdued. In many ways, very much like the depressed market of 2008 at the time of the Global Financial Crisis. By contrast the activity in the market during 2009 is very evident from the chart, showing heightened activity as buyer initially pounced on distress sales as prices fell, and then with limited stock, we saw some scarcity demand factors. This heightened activity did begin to seriously tail off towards the end of the year.

What we are seeing now though, is some relative sustained activity in searches during November, whereas this time last year the activity was really tailing off. The next few weeks through Christmas will naturally see a slowing down of viewing, but come that first and second week of January the level of activity online skyrockets!

Serious enquiry to agents

On a daily basis we are sending hundreds of emails to agents from interested prospective purchasers of property – these are warm leads and the tracking of this activity provides an insight into the market. As with the stats on website visitors, this chart below which shows weekly email activity is indexed to provide a more accurate view year-on-year as traffic and usage of the site keeps growing.

Realestate.co.nz_email_enquiry_to_Nov_2010

The blue line for 2010 clearly reflects the extent of the lackluster property market this year, with much lower levels of email enquiries. Whilst showing a tailing off in the past few weeks (which is only to be expected from a seasonal perspective), the tracking of 2010 does show a certain degree of relative strength, especially through that key period of late October through to mid November. The traditional lead time from email enquiry to property transaction would based on these strong periods, give sufficient time to complete transactions pre-Christmas. This might bode well for the sale figures for  November and December, this then ties back into the recent rise in mortgage approvals.

Classically we will have to wait to see if what we are seeing is a true trend or just a short term blip. What is certain is that we are seeing some key indicators begin to point to a brighter outlook. I am certainly not going to call it a resurgent market quite yet!

10

The future of journalism – gifted amateurs or serious professionals?

Posted on: August 25th, 2010 | Filed in Featured, Media commmentary

Newspapers and onlineThis was not the title of the lecture given yesterday by Gavin Ellis, the former Editor-in-chief of the NZ Herald, as part of the Winter lecture series hosted by the University of Auckland – a series titled “The end(s) of journalism”. Gavin’s lecture was titled “Paying the Piper“. I chose the title for this blog post to reflect I guess, what I saw as the challenge raised within the lecture and representative of the challenges facing the broad media industry in general, of how to deal with the changes wrought by the explosion of self-publishing facilitated by the medium of the social web and the blog.

The lecture provided an excellent and compelling insight into the background to the current state of the newspaper industry globally (more of this later) and then moved on to examine the challenges of how to separate the function of the newspaper – to inform; from the role of the newspaper – to make money. Gavin outlined the Trust models established under governing charters which set out to protect the democratic integrity of journalism as verifiers of the truth in news. Great examples exist – most notably The Guardian in the UK and The Irish Times.

However when it came to the often-debated issue as to the credibility of blogs vs serious professional journalists – the analogy Gavin used of feathers vs. lead shot whilst making the point, did not resonate with me. His argument was that serious professional journalists have a natural advantage in having significant inertia in political influence – and collectively a ton of lead (as the analogy of the collective weight of a group of serious professional journalists) can exert that influence through the media to hold politicians to account. However he then went on with his analogy to liken bloggers and their individual influence to that of a feather, and even when aggregated as a ton of feathers does not have the same attacking impact as a ton of lead. This analogy sadly seeks to generalise bloggers as lone individuals with tiny audiences. This is far from the truth.

There are many bloggers with far greater, more engaged and loyal audiences than many journalists and whole media vehicles. These are not uninformed amateurs,  rather they are more often than not serious journalists who are breaking the news – take Bernard Hickey of Interest.co.nz for example. He has the critical audience to be respected as a serious journalist and can unnerve the odd politician, and yet he is not a cog in a giant media empire. He is not alone here in NZ or overseas there are many other examples – the  Huffington Post being a most notable one.

The point with blogs is that they allow specialisation – empowering experts in tight niche areas to have a voice and engage an audience, yes there are many very amateurish ones, but the beauty of the web is that audiences find and share what they like and the cream always rises. So I would have to challenge the notion of the lecture that the only way to ensure the safety of our democracy (for that was the alarmist view) solely lies in the protection through Trust structures within media organisations where serious professional journalists can operate unsullied by the commercial reality of business. There is a place for this model, but it is important to allow the democratic medium of the web and its aggregation of specialist bloggers to add their capability to the future of news in a new dispersed and open manner which allows it to be pushed to those that wish to receive it.

Returning to the research background of the lecture. I was enlightened and impressed by the analysis of the self generated issues that the newspaper industry has collectively got itself into over the past decade presented in the lecture. Paying respect to Gavin Ellis for his extensive research, let me share a summary of his perspective.

The seeds for the demise of newspapers in the western world and especially the English speaking world were sewn in the 1950′s – a time of rapid rise in newspaper circulation. In the US circulation broke through 60 million by 1964 and in NZ it grew from 785,000 to 1,000,000 in the late 50′s / early 60′s. As circulation grew so did advertising revenue – the era of mass market advertising was in its heyday as Madison Avenue splurged on newspaper advertising. Between 1950 and 2000 advertising revenue in print in the US grew by 2251%.

This booming business of newspapers in the 70′s and 80′s saw the stock exchange listing of many newspapers given the fixed cost nature of the industry which was leading to very high profit margins. With every growing revenue and strong circulation their collective stock values rocketed in the 1980′s. This then sparked a round of acquisitions as media empires were built.

However with the start of the 1990′s newspapers began to loose circulation as alternative media appeared. the US circulation peaked in 1993 and fell below 60 million and has been falling since then. In NZ peak circulation at 1,050,000 fell to 727,000 by 2005. Interesting at the same time newspapers began to quote readership rather than circulation – hoping to bolster the data.

The 1990′s also exposed a fundamental flaw in the industry which Gavin Ellis describes as the “service gap” – as circulation fell, newspapers steadily increased advertising rates – endeavouring to sell a scarce resource, however this was always going to come back to bite the industry as it has done in the last 10 years. However to shore up this broken business model the industry consolidation which began in the 1990′s accelerated with the created safety of  powerful monopolies and duopolies as we have effectively had in NZ. This helped support the industry right up until the Great Recession.

The past 4 years has been the worst of times for newspapers globally. Saddled with enormous debt borne of the aggressive acquisitions of the past decades and hyper inflated stock valuations, matched to declining advertising markets, have destroyed balance sheets and lead to aggressive cost cutting. In the US many newspapers have folded and many more may well yet fold.

Now barely limping back from the effects of the recession, newspapers are challenged by the online world of instant access to all the news – no longer needing to wait for the daily print version when news is truly 24/7 and pushed to individual devices rather than being found. Gavin’s prediction for the future of newspapers (which I could see) would be the elimination of the daily printed newpaper, replaced by a online subscription model wrapped up with a weekend print edition. Personally I could buy (and would buy) this concept – as long as quality content is consistently provided – that quality content could come from serious professional journalists or alternatively the aggregation and curation of the collective wisdom of professional bloggers. Ideally a mix of the two.

Gavin Ellis is the former Editor in Chief of the NZ Herald and is currently completing his doctoral thesis in political studies at the University of Auckland. The notes on his lecture are published by the NZ Herald.
9

Facts on the volume of property sales

Posted on: August 9th, 2010 | Filed in Buying / Selling a home, Featured, Media commmentary

Global Economy and Housing Meltdown around the WorldThe headlines today were focused to what is variously called a “stalled housing market” or the “Do nothing” housing market. However as is often the case, it is really important to look beyond the headline and rhetoric, and examine the facts.

The housing market has slowed enormously in the past year as measured by sales volumes. The trusted and consistent statistics for property sales come from REINZ. The Real Estate Institute collect sales data from all licensed real estate agents across the country on a monthly basis to provide their monthly report. Somewhere around 90% of all properties sold in NZ are managed by licensed agents giving the Real Estate Institute a very accurate representation of the current market transacted in the past month.

The latest data to hand from REINZ is for June 2010. In that month 4,575 property sales were recorded – down 24% from June 2009, however up 6% on the June 2008 sales results. For the first 6 months of 2010 a total of 29,844 properties were sold, as compared to 34,169 in the same period of 2009, a fall of 13%.

REINZ sales data

Clearly the table above shows the market in a very low state of activity, and potentially July sales figures could show a further year on year decline when the July figures are published on the 13th August, however what was most interesting in the articles on the market today was the quote by QV.co.nz Research Director Jonno Ingerson

“The number of house sales in recent months has dropped around one third from the same time last year, and is also around one third below the long term average. We are now approaching similar levels of sales as during 2008 at the height of the recession”

The quote is very interesting as it was not backed up with any factual sales data, nor has QV in the past referred to sales data. QV undertake their analysis of property prices based on Land Transfer documentation, this data clearly includes sales stats, however as the data set of these recorded sales is based on settlements rather than unconditional transaction records the data tends to cover an extended period which may span a couple of months given variable settlement terms.

To enable people to make informed decisions as to the state of the property market requires accurate information, if QV has a more accurate and up to date insight into the property market it would be great to see this information, especially if it does highlight sales down by 33%. I will naturally be very keen to anlayse and share this new transaction data on Unconditional, so I look forward to a response from QV to help provide insight if this data.

2

Auckland property prices – not quite the increase portrayed in the media

Posted on: April 19th, 2010 | Filed in Buying / Selling a home, Featured, Media commmentary, REINZ Monthly data

Auckland Property prices in March 2010 Realestate.co.nz

There was a sense of deja vu about the article in the NZ Herald over the weekend.

“Booming Auckland house sales jump $709 each day”

Are we back in the boom years of 2002 or 2007 when headlines of “Homeowners riding a $500-a-day rocket” or “Auckland homes rise $540 a day” were published?

Whilst the specific statistics quoted in the article were accurate (median price increase), I would judge that the inference that property is appreciating by $709 per day is not valid.

The headline used as its source the REINZ monthly median price data for the Auckland region which showed that between February and March the median price had risen by $22,000 from the February figure of $453,500 to the March figure of $475,500.

These median figures are accurate. Taking the total data set of 2,187 properties sold in March 2010 – the midpoint of that range ranked by price will be a single house sold for $475,500. Equally taking the total data set of 1,578 properties sold in February 2010 – the midpoint of that range ranked by price will be a single house sold for $453,500. However it is not accurate to state that by inference that all properties in Auckland have risen in the month, nor that in fact property prices on average have risen by $709 each day.

The issue with these statistics is that median price is a volatile measure and is susceptible to changes in the composition of property being sold. If there are more properties being sold at the higher price end of the market, then median prices will be reported as higher. That is likely to be the case at this time. The chart below sourced from the regional property sales by price band provided as a subscription service from REINZ – Residential Housing Facts displays the make up of all sales in each of the two months set out by price range along the horizontal axis. The red line represents the percentage of sales in February by price range, with March in blue.

REINZ Auckland price range analysis Feb March 2010

The very clear picture shown by the chart is that for property sales below the median in March represented less than for February, whilst sales above the median in March represented more of the sales. This supports the view that the composition of sales changed significantly and therefore impacted the median price.

Let’s look for a moment at the broader picture for the whole of NZ. For the whole of NZ the composition of sales by price segment is very telling. In the month of March total sales increased by 22% from the February figure of 5,029 to 6,161. In the lower price segment of properties sold at prices below $400,000 sales volumes increased by just 17%; properties sold at prices between $400k and $600k, sales increased by 25% – slightly ahead of the total. However for properties sold at prices between $600k and $1m sales increased 38% and the sales of properties over $1m increased by 55%. This clearly shows a skew towards higher priced properties selling in March.

The Real Estate Institute (REINZ) does produces a more accurate measure of property prices published in its monthly report. In collaboration with the Reserve Bank REINZ publishes the monthly Stratified House price index specifically to minimise the impact that changes in the composition of sales has on price.

The Stratified price of Auckland property sold in March was $479,438 – this was down very slightly on the February figure of $479,975. The chart below tracks the stratified sales price in Auckland over the past 5 years.

Auckland stratified house price March 2010 Realestate.co.nz

As the chart shows the fact is that property prices are not booming. Auckland property prices peaked in July 2007 at $510,197, it then fell to a low point some 16 months later of $435,700, a total fall of just under 15%; subsequently prices have crept back up towards the peak but currently are still some 6% below that peak.

The chart of stratified prices for the whole of NZ as detailed below equally show that despite the peak of property prices being reached some 28 months ago, nationally prices as measured by the stratified price are still some 3.3% below that peak.

New Zealand stratified house price March 2010 - Realestate.co.nz

28

Selling your home? – auction marketing reaches new high

Posted on: March 21st, 2010 | Filed in Buying / Selling a home, Media commmentary, Online marketing

iStock_000009029079XSmallWith the level of homes on the market reaching new highs the extent of auctions is also reaching new highs as reported in the Sunday Star Times today.

In February of the 15,129 new properties coming onto the market, 1,904 of them were being marketed as auctions. That is 1 in every 8 of these new listings. The total is an all time high – surpassing the 1,410 properties marketed as auctions in August last year.

The chart below tracks the percentage of all new properties listed on Realesatate.co.nz in the past 3 years that are being marketed as auctions. The data is adjusted in this chart to exclude mortgagee properties (which predominantly are marketed as auctions as the lender usually is more keen on auctions).

Auctions of new listings

The February total represents 12.6% of all new listings. The chart does clearly show the fact that compared to both 2007 and 2008 auctions have become far more popular as a method of marketing properties. As a point of note the percentage of properties listed in August last year marketed as auctions was actually slightly higher than the February figure at 13.2%.

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