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Archive for the ‘REINZ Monthly data’ Category

1

Property price trends warrant some deeper investigation

Posted on: September 17th, 2010 | Filed in Buying / Selling a home, Featured, Money Matters, REINZ Monthly data

REINZ monthly article headerThe latest data for August from the Real Estate Institute showed a continued sluggish market. Sales volumes are tracking at a very similar level to 2008. The month of August 2008 saw 4,220 property sales, whilst August 2010 saw 4,287. Taking the total for the current year to date (Jan – Aug), total sales this year are only 20 more properties than compared to 2008 (current year-to-date 38,542 compared to 2008 at 38,522). The summary of the monthly sales over the past 4 years is shown below with the 3 winter months of June, July and August highlighted in red.

REINZ_sales_vol_2007_to_2010

One of the consequences of a slower property sales is the fact that sales price statistics can be impacted and this might well be the case with the reported median price of property. In August the median price was reported as being $350,000 up from $349,000 in July. For clarification the median price is calculated by taking the mid point of the sequential range of the 4,287 sales – ie ranked from lowest sales price to highest the 2,143th property was sold for $350,000. The chart below shows the data for the median price by month over the past 4 years.

REINZ_median_prices_2007_to_2010

The chart tracks the rise in median price through early 2007 before plateauing and falling in 2008, before again rising again in 2009 with another recent plateau. Medians are a better measure than averages which can be very heavily influenced by extreme sales prices, but still do have inherent weaknesses from a statistics perspective.

A more accurate and nowadays preferred measure of property prices is the Stratified House price measure. This measure developed in conjunction with the Reserve Bank by the Real Estate Institute shows a somewhat different performance of sales price over the last 4 years a shown in the chart below.

NZ Stratified house prices to Aug 10This chart shows the property prices peaking in November of 2007 before falling by 11.4% over the next 14 months. Subsequently the property prices climbed back up during 2009 to within 3% of the peak, however the past 10 months has seen some erosion of price to where the current price in August is still over 5% down on the peak price of nearly 3 years ago.

A further explanation for the significant difference between the median price and the stratified price can be seen by looking at the relative sales volume within distinct price bands. The REINZ statistics measure sales below $400,000; between $400,000 and $600,000; between $600,000 and $1m and property over $1m.

Taking the total sales in the January to August period of 2010 (38,542 properties) compared to January – August 2008 (38,522 properties) and analysing the relative sales by price band is very revealing.

REINZ vol sales by price bands Aug 2010

In this specific period the median price of property has risen from $330,000 to $350,000 a 6.1% increase. The chart though shows very clearly that more higher priced properties are selling this year than two years ago which will effect the median price as it moves the mid point to a higher price point irrespective of the relative sale price of individual properties. The chart specifically shows sales of properties below $400,000 are down 5% – with 1,189 less properties selling in this price band in 2010 as compared to 2008, whereas the sales in higher price band properties are ahead of 2008.

This analysis I believe provides a clear understanding of why we appear to have median price increasing (up 6.1% vs Aug 2008) whilst the stratified price level is actually up only 3.5% (Aug 2010 vs. Aug 2008), therefore property prices in general are still fluctuating and have yet to find a forward momentum.

16

June property sales signal continued weakness

Posted on: July 14th, 2010 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

REINZ monthly article headerJune signals the start of winter and traditionally sees sales volumes fall. In statistical terms June has a seasonality factor of -4.5% indicating that sales should be around 4.5% less than an average month. For 2010 the sales of property across NZ fell short of seasonal factors – well short.

In the month 4,575 properties were sold; down on May and also June last year. These figures are released by the Real Estate Institute (REINZ) from submitted sales data from all licensed real estate offices across the country.

Applying this seasonality factor, June sales were down 3.6% on May at a seasonally adjusted level of 4,790. Tracked on a seasonally adjusted basis over the past 5 years clearly shows not only where the market is, but also where it appears to be heading with clear sections highlighted to show trends.

Seasonally adjusted sales to Jul 2010

To provide insight to the state of the market as judged in volume terms the chart below tracks June sales for each of the past 10 years. The chart not only shows the relative scale of the market but puts 2010 sales only just above the lows of 2008.

REINZ property sales for NZ - June

It now seems clear that the 2009 sales recovery was more a bounce back driven by a weakness of pricing combined with a segment of sellers that were forced to sell, 2010 now seems to signal a significantly quieter level of market activity.

Taking not just a single month but a 6 month period assist in removing monthly anomalies and shows how in the first 6 months of 2010 total property sales have totaled just less than 30,000. At 29,844 these first 6 months of 2010 are lower than the first 6 months of 2008 which were only slightly higher at 29,870.

REINZ 6 month sales of NZ property 2000 to 2010

As the chart above shows this level of first half year sales places volume at the lowest level since records began with REINZ back in 1993.

Whilst there is no denying the significant change that has occurred to the consumer attitude to debt allied to property investment and borrowing in general over the past 2 years as a result of the global credit crisis and Great Recession, the impact on property sales seems to be more pronounced than would have been expected by this factor alone. There is strong evidence now borne out by these sales figures that a sector of the property market is either sitting on the sidelines or taking a significant period of time out – this sector being property investors. For looking back their influence on the market in the period of 2002 to 2007 is unmistakable.

However what is interesting in analysing property sales figures is to stack them up against the number of dwellings in NZ to look to what extent the frequency of property turnover has changed over the years. Taking the census data for the number of dwelling as the base in each of the past 18 years and applying the moving average total of property sales presents the following chart with the measure of the % of all dwellings transacted each year.

Property sales of dwellings Jul 2010

The last couple of years not only show significant lows as compared to the peak years of 2002 to 2007 but also measured against the more “normal years” of the 1990’s. The current level at 4.2% of all dwellings transacted per year compares to the long term average of 6.3%.

2

Winter property market opens up opportunities

Posted on: June 20th, 2010 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

House in winter croppedWith Queen’s birthday now well behind us, we characteristically hunker down to see ourselves through the longest stretch of working weeks now until the Labour weekend – still some 18 weeks away!

This stretch through the dark winter months may be punctuated by overseas warmth, but it is worth remembering that whilst people may not be strolling along the beach they are actually still buying property.

As cited earlier this year in the post “Is summer really the best time to sell a property” there is good reason to try and sell your home through the winter months, as it is not as dead a time as most people think. The simple fact is that the property market does take a slight breather through the June to August period, by no means does it disappear. The chart below very clearly shows the proportion of a total year’s sales by month (red line) matched to the proportion of total year’s new listings by month (blue line).

Seaonality of sales and listings in NZ

Both listings and sales do dip during the winter, however the dip in new listings is actually more significant than the dip in sales. Such a gap between the two lines does highlight an opportunity as it provides the ability to make your property stand out against the market, when during the winter there are less new listings coming onto the market.

Now clearly the property market is relatively quiet at the moment as the latest data from the Real Estate Institute showed in releasing its May sales data last week. The total for the month of May at 5,206 was up just one single house sale on the April total, but down over 1,000 on May last year. The seasonally adjusted figures showed a 5% decline between April and May. However the fact is that in May there were still 168 houses sold every day. Over the months of June and July and into August these sales will continue, which will mean that between now and Labour weekend we could see a further 22,000 properties sold. The question is – will yours be one of them?

NZ Property sales 2005 - 2010 REINZ Realestate.co.nz

1

Property sales in April show little signs of movement

Posted on: May 14th, 2010 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

REINZ monthly sales data Realestate.co.nzA total of 5,207 properties were sold during April. This represented a fall of 954 compared to last month, and a fall of 1,003 compared to April last year.

April is traditionally a quieter month for sales. April generally accounts for 8.3% of annual sales as compared to March which is closer to 10% (9.8%). Taking a seasonal adjusted position, the sales in April were almost unchanged as compared to March. The chart below tracks this seasonal adjusted monthly sales over the past 5 years. This chart better shows the trends in the market.

Seaonally adjusted sales tracked from 2005 to April 2010 REINZ data Realestate.co.nz

The 5 year period of the chart from January 2005 to the current month certainly highlights the key distinct stages of rises and falls of the market in terms of volume sales. The latest trending period which began around the spring of last year has been typified by falling sales volumes. Back in September last year monthly seasonally adjusted sales were 6,601. In April the seasonally adjusted level has fallen to 5,204 per month.

Another view of the April sales figures is detailed in the two charts below. The first shows actual sales for the month of April covering the last 11 years. The second takes a recent 3 month period (Feb / Mar / April) and examines the actual sales for this same period over the past 11 years.

NZ April sales 2000 to 2011 REINZ Realestate.co.nz

NZ Property sales 3 month total to April 2010 vs prior years REINZ Realestate.co.nzTurning to the results of property prices for sales in April. The median price of all sales in April was $356,000, down from $360,500 in March but up from $340,000 in April last year.

The Stratified Price Index which provides a more robust measure of true price movements which has been developed by the Real Estate Institute in collaboration with the Reserve Bank showed a more subdued picture of property prices. The chart below shows the April stratified price of $366,925. This is down slightly from March at $368,225.

NZ Stratified property price April 2010 REINZ Realestate.co.nz

The chart shows that now 29 months after the peak of house prices in November 2007  the market price of NZ homes is still hovering below that peak level. It has yet to break through to reflect a true price increase in actual dollar terms. The current stratified price is 3.7% below that peak which in November 2007 was $380,900.

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

9

What is normal in the housing market?

Posted on: April 5th, 2010 | Filed in Buying / Selling a home, REINZ Monthly data

iStock_000001558465SmallBernard Hickey wrote an interesting piece in the NZ Herald entitled “Abnormal the new norm“.

In it, he describes what he sees as a new normal in the property market borne of more stringent controls on banks by the Reserve Bank policy requiring more stable and longer-term sources of funding, with less reliance on “cheap hot money from overseas”.  A consequence of this he believes will be a continued shift from fixed rate mortgages to variable rate mortgages. Currently 30% of mortgages are on variable rates – a trebling over the past 3 years. This shift will likely see a closer alignment of base rates to mortgage costs and therefore the impact on the property market.

Whilst I agree with the principle of what Bernard states in his piece, that we are unlikely to see what many had considered to be normal level of market activity in terms of price increases and strong sales as was witnessed over the period of 2005 to 2008; the important question is though, what is going to be this new true normal in the property market.

To assess this requires a view of the historical perspective on the NZ property market. Fortunately the data of the market is comprehensive going back to 1992 through data published by the Real Estate Institute. The data covers both sales volumes and median price. Whilst historical data of sales can provide insight to the future, when it comes to pricing as we have seen in the past 18 months – historical pricing trends are no forecaster of future trends, and it is a brave person to state whether property prices are going to rise or fall.

Looking for trends in historical sales data, the chart below tracks the historical property sales in NZ since 1992 measured as a percentage of all residential property in the market at the time. The key here is that in 1992 when the data began there were 1.18 million residential properties and annual sales at that time were 63,270. Over the course of the past 18 years the number of residential properties has grown to 1.55 million – an extra 370,000 properties.

NZ property market percentage of all homes sold each month realestate.co.nz

However as the chart shows the percentage of all properties sold each month has varied greatly – peaking at over 0.75% in 2004 before falling to the recent lows of the past 2 years, well below long term average of 0.52% and barely half the level of 2004.

The key consideration here is what is likely to be the new norm for the property market. Bearing in mind the comments of Bernard Hickey the period of the mid 2000’s should be seen as abnormal. Interestingly though is the fact is that in the period of 2005 to 2008 the average sales as a percentage of all properties was 0.495% – below long term averages. In fact if you might consider the 1990’s fairly normal – during that period the average monthly sales represented 0.52% of all properties.

Based on these statistics it might be safe to call a normal market around 0.5% of all properties selling in a month. That ratio based on the current number of residential properties at 1.55 million would mean an average monthly sale of 7,727.

The last time the monthly sales of residential property in NZ exceeded this level of 7,727 was November 2007 – 27 months ago. The most recent 12 months of sales total just 69,390 properties an average of 0.37% of all properties per month.

The fact is that based on the current state of the property market sales would need to rise by 34% to just reach what we might call normal. To help provide some guide to recent sales levels as to how close to the new “normal” this market is the table below can be thought of as a ready reckoner. If 2010 was a new normal year (ie 0.5% sales per month) then these are the monthly sales we should be expecting to see.

NZ property market - a new normal, how sales should look

Clearly this year,  just two months in, is showing we are no where near a normal sales level – in fact with only 8,695 sales in the first two months this market is 43% behind the mark. The latest sales for March will be published on the 16th April and it will be interesting to see how they look as compared to a normal market.

0

Taking the property pulse of the market – March 2010

Property Pulse Realestate.co.nzYesterday was a chance to provide an update of the property market on the new regular slot on TV3 Business Breakfast. For those readers who were not up at 6.40am you can view the segment here on the TV3 website.

The summary covered the latest Real Estate Institute sales figures for January as well as latest data on website listings.

Sales

The sales in February totaled 5,029. Whilst up from the 3,666 properties sold in January, the seasonally adjusted sales were 4% down on February 2009 – itself down 18% from February 2008. The most recent 3 month period (Dec / Jan / Feb) totaled 13,652, this compared to 13,236 in the same period in 2008/9. At the peak of the market back in 2003/4 the total was more than double the current level at 26,910.

The chart below shows the period from 1993 to 2010 and tracks the sales for the same 3 month period each year of December, January and February.

NZ Property sales (Dec / Jan / Feb) 1992 to 2010

Sales Price

The Stratified median sales price for February as reported by the Real Estate Institute in association with the Reserve Bank rallied slightly in February from a slide which began in November last year. The figure of $362,150 as the chart below shows is still 4.9% below the peak of the market some 27 months ago. The resurgence of houses prices seen through 2009 when the price came within 2% of the peak has certainly lost steam.

Stratified price REINZ Feb 2010

Listings

The most recent NZ Property Report for February highlighted the rise in the inventory of unsold houses. A total over 15,000 new listings for houses for sale came onto the market in February – a 47% increase on the number in January. This new stocking adding to the existing stock took the total inventory to over 48 weeks up from 40 weeks in January.

Taking the latest pulse of the market looking at the flow of new listings coming onto the market – the fact is that March is going to be another month of significant activity with in all likelihood that another 15,000 listings hitting the market. The key question which will not be answered until the 16th April will be the level of sales of properties in March as recorded by the Real Estate Institute.

The next NZ Property Report for the month of March will be published on Thursday the 1st April (no April fools jokes OK!). It will actually mark the first anniversary of this report. All of the prior months reports are archived on the Unconditional website under NZ Property Report.

8

Property sales for February show a continued subdued market

Posted on: March 12th, 2010 | Filed in REINZ Monthly data

The sales figures released by the Real Estate Institute for Feb 2010 of 5,029 properties sold in the month will come as some surprise to property market watchers.

This figure was the lowest February sales reported since data began in 1992. It represents a 3.8% decline in sales as compared to February last year, which itself was down 18% on the 2008 figure. The figures for the month of February alone tracked over the past decade are shown below. They clearly highlight the decline that has been seen in this key month over this time and the fact that the market remains subdued.

NZ Property sales for the month of February - REINZ

February is traditionally one of the stronger months for sales – on average 8.9% of all annual sales occur in February. February is also the 3rd most active month for sales, after March and November.

Extrapolating this month’s sales figure into a full year would show 56,689 sales. To put this in context the lowest 12 month sales seen over the past 18 years was the period leading up to February 2009 when a total of 53,540 sales were recorded. The biggest 12 month period by contrast was the period ending April 2004 when 121,777 properties were sold.

Taking the seasonally adjusted sales figures over the past 5 years the chart below provides a sense of clarity as to what the state of the current property market.

The key question will be the impact of this slow rate of sales on the inventory of unsold houses. The NZ Property Report for February showed a level of 48 weeks of inventory based on the January sales figures and the addition to the market of over 15,000 new listings in February. It will be very interesting to see the March report which will be published on this site on the 1st April.

NZ Property sales - seasonally adjusted 2005 to 2010

5

Taking the property pulse of the market – February 2010

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.

4

Latest property data shows weakness in sales numbers

Posted on: January 19th, 2010 | Filed in Buying / Selling a home, Other interesting reads:, REINZ Monthly data

NZ house sales data for 2009 shows sluggish market - image istockphotoThe statistics released by the Real Estate Institute (REINZ) yesterday focused on the record median price – $360,000 – stating in the article:

“Real Estate Institute of New Zealand President Peter McDonald says it’s an appreciating market fuelled by a shortage of properties for sale but is looking optimistic for 2010”.

The other half of the story relates to property sales number which were 4,957 in the month – these sales figures are the 3rd lowest in the last ten years for December which is naturally a quiet selling month. The best December ever was back in 2003 when 8,669 properties were sold.

The more concerning fact behind the numbers is that through the last 6 months; year on year comparative monthly sales have been steadily building on the very low sales base of 2008. Through the period from April to November the volumes compared to 2008 was averaging increases of 40%. In September sales were up 44%. However the December sales at 4,957 was only up 15%.

What is more concerning is that a year ago we were experiencing the low point of sales volumes as a result of the global economic recession and the slow down of the NZ property market. This was acute in the 3 month period of November, December and January last year. So in theory we should have seen a sales volume in December more of the order of 5,500 rather than 4,957.

The reasoning behind this view is seasonality. December is on average 7.3% of all annual sales just as November is a bigger month representing 9.1% of annual sales on average. Taking the last 6 months of seasonally adjusted sales prior to the December figures the calculations were all pointing to a total annual sales for the whole of 2009 of 75,000.

The input of the December stats resulted in the total for calendar year 2009 of just 69,629 just 24% up on the all time low of 2008 of 56,128.

To provide a view and perspective of the current sales volumes the graph below tracks the seasonally adjusted 12 month moving average sales volumes over the past 5 years. The key periods of the market have been highlighted to bring clarity to the market movements.

NZ Property sales - 12 month seasonally adjusted

  • The strong sales period – through 2005 and 2006 with sales in excess of 100,000 per 12 month moving average
  • The downturn which started midway through 2007, bottoming out in March 2008
  • The flat period through most of 2008 averaging just 55,000 per 12 month moving average
  • The Spurt of activity in  the first half of 2009 before what has been another leveling off leaving sales at this 70,000 12 month moving average level, before the recent fall off over the past quarter relative to seasonal averages.

Just for clarification this chart is developed by weighting each months actual sales to the seasonal average representation, with the average based on the period 1992 to 2009. So for example taking December 2009 with 4,957 sales – December on average represents 7.3% of all sales of a year therefore in theory this sales volume for December would extrapolate to a 12 month equivalent sales volume of 68,084 sales

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