The Unconditional Blog

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Archive for the ‘Media commmentary’ Category

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Commemorating Sir Edmund Hillary in a meaningful way – think big and be bold

Posted on: January 16th, 2008 | Filed in Media commmentary

hillary.jpgWhilst this blog is designed to share insight and perspectives on the real estate industry in NZ, sometimes there are matters that could benefit from a broader discussion as they that have repercussions for real estate at a macro-economic level. The debate over the proposal for a national holiday to commemorate the life of Sir Edmund Hillary is just one such issue.

A public holiday is just that, a day off work – not typically a time to reflect on the achievements and principles of a great New Zealander. If such a day were instigated, as the years would pass so the memory of the great man would pass with it, and Sir Ed was not a man to take a holiday – he was committed and hard working.

For an alternative approach I would like to suggest a more radical idea (one that was suggested to me today over a coffee by a friend) – why not establish a trust fund for all young people to exemplify the principle of Sir Edmund. We are also not talking about a few small funded scholarships per year – why don’t we be brave and try to make a difference to our country and our economy in the name of the great man.

Let’s get the government to be bold and fore go just 1 day’s tax revenue from all hard working and committed New Zealanders. We all know that the government surpluses are taking up too much space in the basement of the Beehive, so why don’t we create an annuity – a rough calculation would put it at $100 million. They have the money and they sure have plans to get rid of it this year so why not do something bold and meaningful with it – something that we can all share in the legacy of.

A fund of $100 million well managed and administered by valued trustees could kick start our global economic ambitions affording many hundreds if not thousands of scholarships each and every year to help young NZ’ers grow and develop skills in this global marketplace – young people who like all NZ’ers love this country and relish the opportunity at some stage to return home to raise a family and in so doing bring back to this country skill, expertise and cash. Which is key for the long term wealth (culturally as well as economically) of this country – something that I am sure Sir Edmund would have been truly proud to put his name to.

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Google “Street View” mapping will add richness to real estate websites

Posted on: January 2nd, 2008 | Filed in Media commmentary, Online marketing, Website searching

Too much information.. invasion of privacy… big brother watching us. Those are the emotive headlines at the news that Google is out in force capturing ground level images around NZ with camera mounted cars driving down your street.

Twenty years ago it was a very real concern as to the degree with which our privacy was being impacted by advancements in technology. Those Orwellian visions have materialised in a very different form from that envisaged at the time, far from being restricted and controlled, I would judge that in today’s world we are more empowered and enlightened than ever to make better decisions.

The ubiquity and pervasive power of the internet has transformed our lives – where would we be without its ability to answer our every question and provide us with a communication tool which has truly destroyed the tyranny of distance and brought NZ to the shop window of the world (or probably brought the world to the NZ shop window).

So given we should not fear this new level of information, lets look at what “Street View” can do for real estate online.

To start with let’s not forget what the current service offers as mapping has really only been available on real estate website for just over a year – street layout and satellite images to all areas of the country (satellite image resolution is variable, however with time the coverage and definition will only improve). This facility enables a very intuitive ability to search for property for sale based on where you want to live.

As an example let’s say you fancied buying a bach on the Coromandel and you fancied checking out Matarangi – the Google mapping on the site clearly shows where all the properties are located along the beach front and allows a clear understanding of which ones are real “beach front”. The standard view can be enhanced to show the satellite perspective as well – all photographed on a perfect summers day from 183 km above us.

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Now the new capability of Google Street View will provide images taken from 1 metre from the ground rather than 183kms. This will provide the opportunity to not only see the house you are interested from the front gate of the property so you can see the true perspective of the house, you will then be able to spin round and look in more detail at the neighbourhood – what the adjoining properties look like, and also what’s at the end of the street!

All of these enhancements and developments will provide a richer and more valuable experience for real estate search – for both the buyer and the seller enabling a more informed buyer to better evaluate prospective properties. Bring it on! – greater openness and access to information empowers the future.

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The growing proliferation of Property Developer TV shows

Posted on: December 21st, 2007 | Filed in Media commmentary, Property Investing

how-to-be-a-property-developer.jpg

As the fad of Big Brother and Survivor reality TV shows wains, we seem to be being bombarded with a flood of property developer style TV shows replete with budding millionaires all hell bent on proving that they can do what others can’t.

Not satisfied with the terrestrial operators portfolio of Property Climbers, DIY Rescue and A year to pay off the mortgage; coupled with Sky’s portfolio of Property Ladder, Renovation Rescue and Takeover my Makeover; we now have the new kid on the block of “How to be a property developer“.

This time we are no longer just flys-on-the-wall of other people’s nightmare renovation at their own cost (I always suspected that the TV stations inputted some money?), the latest offering decides to up the stakes to a whopping 250,000 pounds (c.$700k) for each of 2 couples to spend to see who can accumulate the most in a year from property speculating and/or renovation.

Now clearly choosing 2 couples who had a modicum of practical ability and a couple of brain cells would be just too dull for TV, so the selection is a perfectly targeted Gen X couple with the baby-on-the way matched to a couple of “air-head” middle aged friends who have no appreciation of what paint is let alone how to do any DIY.

Now I don’t actually have a problem with the programme or the participants as clearly there is a market for such programming or TVNZ would not have invested our hard earned tax dollars in it – and clearly I watched it! – no what really amazes me is the fact that despite this type of programme there are still people in this day and age who treat property buying with less respect in terms of background research than they do buying a TV.

This show let alone any of the TV shows never seem to show people using the best source of information available in our modern age – the ubiquitous personal computer linked up to the internet. How would anyone with any desire to succeed in real estate not approach the market from the best source of information – real estate websites? – well these TV shows clearly do as they portray their guinea pigs aimlessly walking into a real estate office as the best means of assessing what is available to buy on today’s market.

Why is it that the TV channels never want to show the reality of so many of our daily lives – our use of the internet to search out information before buying anything?

Could it be that TV companies believe that their very future – like that of the newspapers is in serious jeopardy from the encroaching power of The Microsoft / Apple / Google triumvirate?

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The Joneses – “virtual” real estate or “real” real estate?

Posted on: December 14th, 2007 | Filed in Buying / Selling a home, Media commmentary, Online marketing

The news that The Joneses are planning to list on the stock exchange next year is in someways not surprising. It has many of the hallmarks of a “venture capital funded” / “new business model enabled” IPO. Initial investors are keen to see their risk capital rewarded by a broader share ownership which will afford expansion opportunities as well as realisation of early gain in value.

The enticing figure quoted by Chris Taylor of enabling investors to secure a share of a $1.2 billion market will certainly sow the seeds for a healthy interest in the reverse listing.

What caught my eye was a reference in the article on Stuff that stated that The Joneses planned to branch out into “second-tier” markets, and hoped to have 10 -15 offices in the next few years.

Now my understanding of the business model of The Joneses is that of a “virtual” real estate company – there are no offices of The Joneses on the high streets of Auckland, Wellington, Christchurch and Dunedin – they are a highly developed customer management and marketing business that creates demand through advertising to meet the supply created through exceptional service – that’s the idea at least as I read it, so what is with this idea of 10 – 15 offices??

I personally share the views expressed very well by Mike Green – the MD of Harcourts on his blog that there is a very real prospect in the future of high streets devoid of real estate agents. Expensive office space is currently used to “house” real estate agents who seldom spend any time in the office. Additionally the days of prospective buyers wondering in to offices to find out what was for sale have been completely replaced by online searching.

So what are the future plans for The Joneses?

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House prices up or down – who to believe QV or REINZ?

Posted on: December 11th, 2007 | Filed in Media commmentary, Money Matters

We seem to have opposing views as to the state of the housing market and all eyes are on the Reserve Bank Governor as to his take on this twist in the property soap opera.

In the left corner representing the state owned enterprise QV we hear that the average price in November was $393,198 with prices now having fallen for the 3rd straight month.

In the right corner representing the Real Estate industry we have REINZ who states that prices have actually increased with a median price in November of $352,000 up from $350,000. This on the back of an increase in sales volumes of around a thousand from October.The key in this tussle is not the motives of the reporting agencies but the principle of where the data comes from and how it is reported. As the old saying goes – there are lies, damned lies and statistics!

The reported statistics from the Real Estate Institute are the easiest to explain. They collect reported unconditional sales data from licensed real estate agents around the country every month – in November there were 7,837 house sales and in the month of November the median price was $352,000. Now a key here is the statistical metric of median price – not average price. Median is the center point of a range in this case the 3,918th sales price when you line up the 7,837 sales from highest to lowest.

QV data is not as easy to explain. Their source of data is the local councils. This data comes in to them slowly over the months following legal settlement of sale that is why they report a figure for data collected for a 3 months. It is likely that the make up of data will cover sales going unconditional up to 2 to 4 months ago, which has trickled into the local authority stats in the past 3 months. Additionally they report average sale price – a very different statistic.

I hope this sheds some light onto why there are differences in the absolute numbers as well as the trends.

As ever with statistics, you will find as many people in favour of one presentation of data as you will another (average price vs.median price), however I firmly believe that timeliness of data should always be championed in reporting.

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Newspapers using property headlines as self-serving advertorial

Posted on: December 9th, 2007 | Filed in Media commmentary

Our national newspaper (or at least our largest circulation paper) The NZ Herald leads today with the story “Buyers in line for good deals as market booms”. This centrepiece of “news” is nothing but blatant self serving advertorial for Adam Parore mortgages and the The Herald’s own property advertising section. Surely the Herald would have thought that more important social issues such as “Three murders in one night” worthy of a more prominent feature.

With the slowing market of the past few months the lending sector has hit a wall. Brokers had had to fight to find business; matched with the fact that newspapers in general are losing relevance and are being used less and less as a resource for real estate information as real estate search moves online and you have the ingredients for a great self-serving headline.

Research carried out earlier this year for the real estate industry showed that over 80% of property searches start online (a growth from 70% a year earlier), whilst national newspapers fell to just 50% (down from 57% a year earlier). Add to this the well known and understood fact that people under 30 do not buy or read newspapers, and you can see the logic of their business tactics.

What I find even more amusing and somewhat ironic is that instead of the Herald quoting their own website for statistics (search4homes) of properties which are demonstrating reduced prices, they refer to their competitor’s site – Fairfax’s Trademe property section! Given the numbers it is not surprising; the Herald has 6,600 properties, Trademe has 55,000, whilst our site has over 93,000 listings.

Clearly it is now the case that in a world where online is sucking the life out of newsprint property advertising the tactic adopted by them is obviously do anything (including referencing your competitor and demote “real news”) rather than capitulate to the market trend to online searching for property and report news stories!

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Affordable housing – can we please learn from others!

I am not sure if I am more amazed by this proposed bill being introduced by the Housing Minister to provide for affordable housing or by the only reaction that the media could find to report – that being the Property Council’s view that the outcome of the bill will result in higher building costs as developers, forced to take a lower margin on “affordable” housing pass on this “cost” to regular buyers.

Is everyone missing the point here?

This proposal is unworkable, how would it ever be possible to demarcate a property as “affordable” – it is a house, indistinguishable from any other house. I shudder at the thought of a highly expensive bureaucratic team established to monitor these new “affordable” houses so that some “unscrupulous” owner did not try and sell such a house on the open market and land a sizable profit.IKEA BoKlok House - affordable housing for the UK

The housing market is a private sector open-market economic model driven by supply and demand – for the government to try to intervene is naive at best. Sure there are issues with affordability of homes for young people, but trying to create an artificial market for a designated house is impossible – surely we have some intelligent advisers in our government who could look to see what they can learn from others.

Overseas there are very workable models of assistance in the area of finance to help young people buy a home (of their choosing – not some select group of properties our government want us to buy).

Additionally why not let the market demand encourage developers find new ways to build more efficient modular houses – try looking at the IKEA housing model in the UK. We are not alone in this world in having social and economic problems – how do we let politicians come up with such half baked ideas!

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How slow will it go?

Posted on: November 16th, 2007 | Filed in Buying / Selling a home, Media commmentary

It’s now widely accepted that the property market in NZ has slowed down.

There’s been a lot of speculation in recent months about our property bubble, when it will burst and how loud the bang?

The media has been true to form with sensational headlines describing a housing ‘slump’ or ‘crash’ while the Chief Economists try to temper the media’s excitement saying it’s a market ‘correction’.

The question now is, how slow will it go?

We may not know the answer for many, many months but there are some known factors that may give perspective.

  1. Ongoing media commentary about ‘property slumps’ will contribute to sales and prices falling – the self fulfilling prophecy phenomenon.
  2. The Banks know this, which is why their Chief Economists will continue to be conservative with their predictions.
  3. Despite the slowdown, the Reserve Bank is still expected to increase the Official Cash Rate because of rampant inflation.
  4. The property market commonly slows in the run up to an election – people hold off making big financial decisions until the make-up of the new government is known.
  5. It’s almost election year but it’s likely to be a full 12 months before we know who will govern.
  6. Mortgagee sales and hard working kiwi families losing homes makes for great headlines but poor polling in an election year, so the government will be working to ensure there’s no bubble blow-out before November.

Since the speculation about the slowdown started, we have been closely monitoring traffic to the website, searches, listings, length of listings on the site and other indicators that provide market information.

Interestingly whilst the stock of property on the website has risen sharply over the past 6 months from 74,000 to now over 91,000 as a result of the slow up in sales, the traffic to the website has grown from 240,000 unique browsers to now over 265,000 last month.

Clearly the buying public of NZ are as is usual in spring actively thinking about moving home and the sale and purchase of a property, however this year with the transition from a sellers to a buyer’s market these consumers are more patient and are more actively using search facilities online. Spending longer to better prepare them with a deeper understanding of the market place well ahead of any prospective property purchase.

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