The Unconditional Blog

The fact is that as at the end of December 2007 there were just over 60,000 properties for sale on realestate.co.nz amongst the total of 99,000 listings in total. The balance being Commercial property, Farms and Agricultural land and Businesses for Sale as well as Property for rent.

The website is subscribed to by over 1,300 real estate companies across the country and represents close to 90% of all listings by licensed real estate agents, thereby anointing the website with the title of the most comprehensive website for property in NZ and also a very critical ‘bell weather’ to the ‘lead indicators’ of the property market.

By analysing the sales statistics from REINZ and cross matching it with the listing stock on the website you quickly build a picture of the current state of inventory in the NZ market for property.

In the space of 12 months through 2007 the level of inventory rose from around 4 ½ months at the start of the year to 8 months stock at the year end, this growth was most pronounced in the second half of the year, shooting up from 5 ½ months in July.

In absolute terms the number of houses seeking buyers has risen by over 10,000 (June 50,134 to December 60,427). The figure at the end of January was slightly down at 57,525 however we will have to wait until the January statistics are released by REINZ to see if this reduction in stock was reflective of sales or withdrawals.

So what can we glean from the data as a key indicator of the state of the real estate market?

Clearly with a stock level of around 8 month worth of sales – the supply far outweighs the demand with a consequential ability for buyers to be patient and selective – allowing them not to be panicked into a buying frenzy as was the case over the past couple of years. As for sellers, the competitive effect of this amount of stock of potentially alternative options for buyers means presenting a property in the best light to attract a buyer and then ensuring that price expectations are realistic. A reality is that properties are selling – just not in the amounts that they used to so if you plan to sell, you need to be realistic to the market.

However as with any statistics caution needs to be applied as these statistics are broad based across the whole country, and just as there is no median house, so there is no marketplace for all 57,000 properties. The fact is that real estate is a local market.

Looking on a regional level, not surprisingly the analysis shows up some interesting variances:

Immediately you are drawn to the regions of Northland and Central Otago Lakes with nearly 2 years and 1 year’s inventory respectively; both of which are areas with a active tourism impact and which have been subject to extensive development over the past few years.

At the other extreme Otago and especially Southland record the most modest growth in inventory and low actual stock levels, Southland the lowest inventory in the country at the end of the year with just 4 months. The two areas of Auckland and Waikato / BOP represent collectively 49% of all the inventory and therefore mirror naturally the national figures. Wellington which is normally considered to be a market immune to peaks and troughs certainly seems to indicate a real growth in inventory from around 3,700 in the first quarter of 2007 to end the year at just on 5,000 properties on the market.

Whilst the January sales figures due to be released this week will indicate the likely trend for 2008, it is pretty clear from all other indicators that the property market has slowed considerably, the Auckland sales reported by Barfoot & Thompson for January being some 40% down. January is traditionally one of the quietest months and an indicative figure or between 4,500 and 5,000 sales across the country for the month would seem likely. This would be a 40% decline and be the slowest January since the early 90′s.

It is proposed to update these inventory statistics on a regular basis on Unconditional – subscribe to an RSS feed to ensure you are kept informed on this and other subjects on the real estate industry.