This post complements the earlier post which looked at sales trends. In this post I want to look at the demand indicator of the market as seen from the statistics of websites focused on real estate.
In the first 6 months of this year an average of 975,000 sessions every week were undertaken by NZ’ers onon real estate websites – this is the aggregated total of just the number of NZ’ers searching for property – staggering! This statistic continues to demonstrate and reinforce the fact that over 80% of all real estate searches start online – a number that keeps growing year-on-year.
With an average session duration of just over 15 minutes that means that over a quater of a million hours a week are spent by NZ’ers searching for property – this is clearly a national infatuation – close to rivalling reality TV!
However whilst people may well be logging on to real estate websites at the rate of 975,000 individual sessions per week, this number nowhere near relates to the number of people who are actively looking for property. At anyone time there is usually only around 25,000 people really actively searching.
Part of the reason for this massive disparity is the enormous traffic on Trade me. Just last month over 3.4 million unique visitors went to Trade me searching over a million items across hundreds of categories – whilst on that site those visitirs quite often check out property listings which has a massive consequential effect on these numbers.
Despite this, tracking web traffic on real estate websites can provide insight to comsumer sentiment as a surrogate for active buyer sentiment and interest in researching for property. The graph below details the weekly level of visitor sessions across all listing websites over the past 2 1/2 years.
The blue line tracking 2009 to date certainly highlights the growth of online searching compared to 2008 and 2007. The red line of 2008 is notable for its lack of seasonality movement after the first quater of 2008 – a function of a somewhat depressed consumer sentiment as the realities of the great recession crept in.
Representing this data not in absolute terms as the chart above does but as an index measure helps to remove the factor of the ever increasing usage of the web as an underlying driver. The chart below shows this index representation of the data and shows a clearer view of the real health of the market.
Presented in this way shows more clearly the seasonality of the market, the peaks post Christmas and then again in the spring. The 2008 data shown by the red line shows even more clearly the significant slip in interest through late summer of last year and also the failure of buyer interest to rise in what would have been an expected seasonal upturn in spring.
The trending line for 2009 shown in blue does very clearly demonstrate a close correlation to the 2007 year – a year that might well be regarded as a year typified as a steady market. The peak of summer activity this year might not have been so high but recent weeks show that interest remains strong albeit set against a seasonal slowing of interest.
As noted earlier the scale of property viewing online is of a scale that can be influenced by factors outside of core buyer interest and intent to purchase. That is why it is valuable to review statistics from further along the path from casual interest to serious enquiry. This statistic is best represented by email enquiries sent from the website of realestate.co.nz. Every week many thousands of emails are sent to agents acting on behalf of vendors, such emails establish contact between interested buyers and those agents and largely then lead to a purchase at some stage in the future making email enquiry traffic a potentially far more reliable indicator of demand for properties.
The chart below tracks the level of email enquiry on an indexed basis which once again removes the factor of the significant growth in traffic to realestate.co.nz in the past year (+30%) and the consequential rise in email enquiry to agents.
The most striking thing as represented by this chart is the relative strength of enquiry by email in the year to date. Compared to both 2008 and 2007 the scale of email enquiry remains strong. A component of this could be the greater ease with which prospective buyers are interacting with agents through the website; equally an underlying increased level of buyer demand could be a key component of this strength.
This heightened level of enquiry certainly mirrors the sales activity of the first 5 months of this year in which sales have recovered from the exceptionally low levels of 2008, with sales up by 33% on a year-to-date basis.
The seasonal easing of enquiry for 2009 is very clear as the latest data is reflecting more closely 2007 trend. It will be most interesting to see the tracking of this as we head into the traditional season uplift in spring.
The detailed examination of the trending of 2008 is very interesting as shown by the red line – activity would at best be described from this chart as subdued verging on comatose! If you overlay on that line the key news / economic stories of 2008 you can very clearly see how the web is very much a lead indicator of consumer sentiment as it affects the buyers propensity to undertake real estate search. To be clear I have overlaid on the graph below the 2 major periods of 2008 to demonstrate this correlation.
The February downturn reflected the convergence of media stories highlighting global recession and the falling property prices in NZ and around the world as well as stalled property sales. The 15th September date will forever live in history as the day Lehman Bros collapse plunging world economic indicators into the red.
Big movers!
It’s as much a part of the NZ property market as street signs and auctions! – the open home is the efficient and effective tool to enable agents to promote their clients homes and in doing so evaluate the interest in the property from prospective buyers.
The media commentary of the last few days has polarised around the impact of returning kiwis and increased long term migration:
