Calling a turning point in a market is a risky thing to try and do, but when it comes to property sales there is now compelling evidence that the market is warming up again following some of the slowest sales months of the last decade.
Leveraging multiple sources of data provides robustness to this prognosis:
1. Website visitor activity in line with 2007 despite earlier fall off
The level of visitor sessions from domestic browsers to a basket of real estate websites has shown a tenacious attraction – defying the doomsayers of the media. Averaging around 325,000 sessions per week, this is pretty much line-ball with this time last year when the pace of the market was considerably more active. The graph below tracks this basket of 6 websites through 2006/ 2007 / 2008. The post earlier in the year sited the striking coincidence between the timing of extensive media coverage by prophesiers of a property crash and the fall off in traffic to these websites back in late February early March, a position from which a more stable level of engagement has followed.
2. Inventory is reducing whilst sales volumes are plateauing
The inventory of residential properties on the realestate.co.nz website is falling – July saw inventory of homes for sale fall from an April peak of 65,716 to just 60,150. This is the 3rd straight month of inventory falls. The sales volumes for the same period have been pretty stagnant at around 4,350. There tends to be a lag effect between listings inventory movements and sales of between 1 and 2 months in most cases. The July sales figures from the REINZ showed an unseasonal increase from June (July is normally the lowest sales month of the year). The graph below tracks the inventory and sales per month from October 2006; it is very clear the turning point of July 2007 when sales started stalling and inventory started rising.
3. Enquiry for properties is increasing
The number of email enquiries forwarded to real estate agents from realestate.co.nz on behalf of interested buyers has grown markedly as can be seen from the graph below. The graph tracks comparable enquiries on a seasonally adjusted basis over the past 18 months with the period since May showing a marked upturn.
Now the key point in this collective analysis is market liquidity, there is no inference for property prices. The current analysis provided by the Real Estate Institute’s sales and median price data up to July show the median price stagnant in the range $340,000 to $350,000 a position it has held now for over 16 months with the exception of just 3 of those months. Does this tell us that property prices are definitely holding their own or has the sales decline so significantly altered the mix that the median can remain static whilst underlying prices change? – I don’t propose to attempt to predict prices.
Finally I would add one more validation to this premise that the market is active, far more active than the most recent 4 month period. That validation comes from an economist – Tony Alexander who in his BNZ weekly overview of the 14th August commented:
“The REINZ reported this week that there were 4,489 dwellings sold around New Zealand in July. This was a decrease of 33% from a year earlier which sounds fairly shocking. But it’s actually the weakest annual rate of decline since February and in seasonally adjusted terms sales in the month improved by roughly 5% after rising 9% in June.
Sales activity appears to have been at its most depressed levels over the months of March, April, and May but since then there has been some greater matching up of the dreams of buyers and the hopes of sellers and hence an improvement in turnover.”
Further he commented in regard to pricing
“..it’s interesting to see that still there is no evidence prices are pulling back to any significant degree. The median dwelling sale price for the entire country in July was $340,000. This was exactly the same as the median price in June and down by only 1.4% from a year earlier
For the moment we think the results for June and July indicate a pulling back from the scenarios some people are peddling involving prices falling 30%. Heck, even in the United States prices have “only” declined 19% over a two-year period and they experienced massive bad bank lending to people who should never have been given a sniff of mortgage money in the first place at low teaser interest rates of 2%. Nothing remotely approaching that has happened in New Zealand and we know many people got a very unpleasant surprise over the past three years when they went to their bank expecting to get 100% financing and found their income was not high enough to qualify.”
As a final cautionary note he states:
” ..it would be equally wrong to believe there is anything remotely smelling like an upturn just around the corner.”
” So the interpretation we invite people to take from these latest numbers is merely a pulling back from an ugly brink but not the end of the downward slope or even visual confirmation of the bottom in the near distance”.
My take on this as a summary would be that I think we can expect the traditional lift in sales and interest in the market that spring usually brings but not necessarily at the kind of levels we’ve seen in recent years, hence why I say an upturn in the market is imminent. Just to ensure that I temper any implied over enthusiasm, the analogy I would use to describe this warming of the market is the kind of slow and steady warmth you apply to frostbitten body-parts to avoid amputation!
This reflects exactly what we are finding in our office at Pt Chevalier
, Auckland.
Of the last three properties we listed one sold in a week, another under contract in less than ten days, currently featured at http://www.realestate.co.nz/863862 and the third has an offer pending. Our two sales prior to that also took less than a week to sell.
For the second time in 6 weeks it looks like we will be “sold out” of homes and urgently need more.
So Alistair your report on a pickup in activity has certainly been mirrored in our office.
The feature property mentioned above has had huge levels of enquiry with over 1800 hits from all around the globe, see http://www.realestate.co.nz/863862/statistics
Amazing the number of hits and emails from the USA, UK, Australia and South Africa that we are receiving lately.
It’s all looking far more optimistic for the housing market as we head into the spring selling season:
Lower interest rates
Wage increases
Tax cuts on their way
Houses now more affordable
Exchange rate heading down
Oil and commodities retreating
Don’t seem to be too many negatives as far as we are concerned and buyers seem to be thoroughly in agreement!
Hi Alistair, timely post that’s bound to generate plenty of comment. Your ability to graphically display the increase in email enquiries is particularly telling I believe. This type of info wasn’t available years ago, so thanks for sharing it with us. If you hadn’t been instrumental in pushing for more addresses on listings, the number of email enquiries would have been even higher.
I’ve received with 7 offers on two properties in the last two days and another offer likely tomorrow. Many opportunistic people are sensing it’s time to make a purchase. They’re feeling good about the price they are paying now. Better to buy now than 12 months ago eh!
Thanks guys for sharing your experience – Ross the tracking of viewing statistics is a great demonstration of an ability (facilitated through the power of the web) for all parties in this industry to be better informed and thereby able to make decisions with better information.
Interesting stuff. A thought about one of Tony Alexander’s comments (which is trotted out fairly regularly) that I’d be interested to hear others views on.
He states “…there is no evidence prices are pulling back to any significant degree. The median dwelling sale price for the entire country in July was $340,000. This was exactly the same as the median price in June…”
I think this approach confuses the median amount buyers pay for property with property prices. To explain, if the median remains the same, but people are getting ‘more property for their money’ then prices have actually dropped.
Medians taken over a very large sample may not show that buyers are spending the same dollars but able to buy a better property with those dollars. Samples take in a much smaller geographical area may actually be more likely to show if there has been a price drop.
Your readers might be able to confirm this.
Data backing up this topic just released:
The size of New Zealand’s population gain through migration is showing some signs of recovery. Statistics New Zealand (SNZ) data published today showed a Permanent Long Term migration gain of 700 people last month, up from 200 in July, with PLT arrivals up by more than 800 which was partly offset by almost 400 more PLT departures.
Net PLT migration had increased in three of the past five months compared with the same months in 2007, SNZ said.
[...] turning point in housing 22 08 2008 It is interesting to see the real estate blog calling a “turning point” in the housing market. For the sake of completeness, I’m going to attempt to call the [...]
“The current analysis provided by the Real Estate Institute’s sales and median price data up to July show the median price stagnant in the range $340,000 to $350,000 a position it has held now for over 16 months with the exception of just 3 of those months.”
Why does no one ever mention inflation ?
If prices have remained the same for a year, and the price inflation rate is say 5%, then real terms house prices have FALLEN 5% in that year.
The hidden and often never mentioned stealth robber of real wealth – inflation.
It will be interesting to revisit this article in a years time
Steve
Steve
As you are probably aware, there is plenty of obsessive dicussion on inflation over at Interest.co.nz
Here’s my way of thinking:
From a vendors point of view it will depend if they have a mortgage or not.
a) No mortgage plus inflation & flat prices, is bad – as you say robbing wealth.
b) With mortgage & flat price, inflation is not so bad cos value of mortgage amount is reduced by inflation rate (assuming the interest is paid each month)as is the value of the property.
c) With mortgage & price increase, if increase is less than inflation, then both property & mortgage values are being eroded, so same case as if no increase.
d) When price increases are greater than inflation then you are making money.
From buyers point of view, with flat prices, inflation kills any deposit at the same rate as it depreciates property value (although the dollar values are much bigger for the property)
Anyway, no-one (buyers or sellers) think about inflation, they are only concerned about absolute prices they can get or have to pay.
I mean do you think about the “real value” of the petrol you put in your car, or just the $2.20 a litre you have to pay ?
Alistair & Ross
I hope you are right, but a most important factor you have not mentioned is the availability of funds.
It is fine for interest rates to drop (a little) and prices to drop (a little – however I don’t think 5% suddenly makes everything “Äffordable” overnight) but with banks being less willing to lend, then only those in very healthy financial situations are likely to be settling- regardless of how many might be looking, enquiring etc
Interesting article in the NZ Herald Sunday edition.
Over 4,000 homes sold in July and expect at least that amount or up to 50% more to sell in each of the next three months, potentially that is 16,000 mortgages over a four month period – the banks will be competing hard for that smaller volume of mortgages – they can’t keep taking deposits and paying customers interest without putting through the loans at the other end. Let’s hope this pressure leads to lower rates for borrowers although depositors may not like it.
Steve
I couldn’t help reflect on that comment “it will be interesting to revisit this article in a year’s time” – through the process of this blog you will be able to – just as you can go back to January of this year and read some of the early stages of the market slump.
Given that the Real Estate profession has a vested interest in selling the idea that ‘now is a great time to buy’ – this posting should be read with a large degree of skepticism.
As an American Expat living in ChCh for the past year it seems to me that household income relative to the cost of housing is out of whack. My info is anecdotal – so I’d love to see a post with statistics about percentage of income used to pay typical mortgages around the country. Also some discussion about the threshold at which mortgage becomes more of a burden than its worth would be useful. For example if 50% of a persons household income goes to paying the mortgage, rates, etc then what does that mean in terms of whats left for discretionary income after items like utilities, food, petrol etc?
Interest rates may have dropped a bit but are still high when compared with other countries. Great for savers… not so great for borrowers.
I also take issue with the website traffic statistic listed above… can you show some direct correlation between site traffic and home purchases? This data could be completely meaningless if outside variables are effecting your web metrics. Interest may not equate to action.
The 19% decrease in U.S. home values is also mis-leading. That’s an average taken from a many distinct markets within the U.S. Just within one sub-market, the S.F. Bay Area, some cities have been ravaged by foreclosures and historic drops in median home prices while others have escaped relatively unharmed. With the entire south island having the population of roughly on largish U.S. city it might be more appropriate to compare NZ with an economic region within the U.S. That figure may be very different than 19 percent.
Hans
Thanks for your contribution. Let me state that running a website I do not directly have a “vested interest” in selling up the market – I measure success by subscription to the website by real estate offices and consumer traffic – both are a function of each other – content gives value and consumers are looking for content. Therefore I am reporting statistics – not talking up anything.
I believe as I state that taken together there are signs, now time has proven it to be the case that early signs can be wrong and in a couple of months time I may be proved wrong – if so, then I will concede I took the statistics at the time and made an incorrect assumption.
In terms of affordability I would refer you to some excellent statistics and graphs provided by interest.co.nz which provide such information.
In regard to the stat of 19% decrease in US home values – I cannot see this posted here.
Evidence enough to predict the property market is warming up? Maybe this home
http://barfoot.co.nz/scripts/db.dll/details?sid=300.2&ref=394871
is not evidence enough but it does provide a “real time” clue to believers and non-believers alike. Under contract, 6 offers presented over the last 5 days. The original contract was a “multi-offer” and the backup contract produced another separate “multi-offer” from 2 new buyers. There are now no less than 5 hot unsatisfied buyers looking in this location in this price range. If only I had another one (or five) to sell to them! And I’m sorry I just can’t buy this doom and gloom all around me. Including this sale, I’ve personally sold 4 homes over the last 5 days, involving 11 offers. The spike in email enquiries, for me, has translated into a market that is healthier than the media would lead you all to believe. So there! Be skeptical!
Steve
I couldn’t help but have a look at the viewing statistics on this listing. Interesting to see the interest coming from the USA representing over 20% of all viewings so far – something about appears to appeal to the yanks!
Love the use of video, but I would have to say – 7 photos do not do justice to a good presentation.
Steve – your profile video is excellent!
Alistair,
I think where you may come in for some criticism, is when you choose a title as you have done, and present a view, as you have done. I’m glad to see you accept that your view may be proven wrong.
I think your options are:
1. Present your current view.
2. Present just the data, without any interpretation.
I suspect you would prefer (1) simply because it will gain more interest, which is understandable.
I have no complaint about that. And it will make reading these articles in a years time more interesting
————-
Re US house prices, the latest report is out here:
http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_082653.pdf?vregion=us&vlang=en
US house prices are falling at 16%/year.
————
Re the state of the housing market in NZ, I think the fact that Horncastle homes are offering a FREE $24,000 Fiat Punto with every house says quite a lot.
An example:
http://www.trademe.co.nz/Trade-Me-Property/Residential-Property/Houses-for-sale/auction-155519650.htm
Sorry I can’t find an example on this website.
———-
No doubt the number of sales will pick up over the next few months. They usually do at this time of year.
But they are still way down on what they were last year.
Sales Numbers for 2006
Jan 6,360
Feb 7,930
Mar 10,039
Apr 7,576
May 9,642
Jun 8,428
Jul 7,761
Aug 8,556
Sep 8,658
Oct 8,857
Nov 9,990
Dec 8,245
Sales Numbers for 2007
Jan 7,566
Feb 9,357
Mar 10,000
Apr 8,194
May 9,285
Jun 7,474 <— Drop in numbers starts here compared with 2006.
Jul 6,660
Aug 6,394
Sep 5,894
Oct 6,854
Nov 7,837
Dec 5,597
Sales Numbers for 2008
Jan 5,186
Feb 6,356
Mar 5,129
Apr 4,464
May 4,372
Jun 4,305
Jul 4,489
————-
Finally an interesting bit I read the other day:
Pride and Prejudice: Examining the Psychology of Those in the Housing Industry.
http://drhousingbubble.blogspot.com/2007/08/pride-and-prejudice-examining.html
Quote:
It is hard to be objective when your job depends on seeing things a certain way. Many people have a hard time accepting mistakes and would rather lament and lash out at others that contradict their view of the world. I remember posting in a housing forum 2 years ago the same analysis I’ve presented many times here on the blog. Those in the housing industry would dismiss the bubble argument as holding no merit and would simply pull out a nice upward trending chart, and point to the current median price. They were right. All the numbers pointed to incredible appreciation, quick sales, and no signs of stopping. My view was income in many areas simply did not support the current growth of the market. The only way the market was being supported was via exotic financing and bubble psychology. In a bubble market, psychology and perception is just as important as economic fundamentals.
……
The argument has psychologically shifted. There is no need to talk in obscure forums regarding the housing bubble. The mainstream media is now carrying the baton. Now the argument of many in the industry is one in which they are blaming all the negative press for popping the bubble. “Income is rising, population growth is occurring, and housing is still strong.” Or so they would like you to believe. Tell that to the tens of thousands of former mortgage workers. And this argument seems more of a self pacifying defense mechanism of convincing themselves that somehow the market will be back to its old tricks again. Deep down they pine for yesteryear when you could get Funky your mangy dog a $450,000 mortgage and move him into a 500 square foot home with no co-signer.
Endquote
and:
Tuesday Morning: Irvine Blogger Goes Inside the Mind of the Bubble
http://latimesblogs.latimes.com/laland/2007/06/tuesday-morning.html
Quote:
“The above graph is an excellent depiction of the psychological stages of a market bubble. It is fairly easy to put time frames to each of these stages as displayed by our local housing market:
• Take off: 1998-1999
• First Sell Off: 2000
• Media Attention: 2001-2002
• Enthusiasm: 2003
• Greed: 2004-2005
• Delusion: 2006
• Denial: 2007
• Fear: 2008
• Capitulation: 2009-2010
• Despair: 2011-2013
• Return to the Mean: 2014
Endquote
It must be tough trying to be positive when there is the US & UK housing markets sat there (well falling really) as examples.
But remember, houses always sell. There is always money to be made as a REA. It’s just that volumes are down, and so are sales prices.
Steve
Hans,
Bernard’s site is very good.
But Rodney’s articles are very detailed and informative:
http://www.sra.co.nz/literacycentre.html
For example this one:
Are we heading for housing market hell?
http://www.sra.co.nz/pdf/housinghell.pdf
Have a good look and you’ll find most of the information you’re looking for.
Steve
Steve
No one can say that you do not present a well researched opinion!
What I think is interesting is the view that as the market kept rising and everyone kept believing that somehow this time it was difference, why not have the same in a falling market, when the mass of opinion says – this is going to get so much worse, why not be the lone voice saying “hell no – we are seeing some bright light at the end of this very dark, but short tunnel”.
Ross,
Thanks for your compliment on the vid. Returning the compliment, your http://www.unconditional.co.nz/ptchev/ is one of the best!
Hi Alistair
I’ve been checking the state of the UK market over the last few days.
One risk you run is shown by this rather fun example.
From just 3 months ago:
Housing crash?
http://www.youtube.com/watch?v=n9yYGhcTFac
From yesterday, just 3 months later than the first one:
Fionnuala Earley on 10.5% house price falls
http://www.youtube.com/watch?v=dx5CnDMWphI
Just compare the first one with this from the same time:
From May 29 2008:
Seema Shah of Capital Economics
housing analyst on SKY news
http://www.youtube.com/watch?v=W-jH_xcaZng
I’m rather surprised no one seems to have covered this here:
House prices ‘fall 10.5% in year’
http://news.bbc.co.uk/2/hi/business/7584877.stm
Some amazing charts in the report:
http://www.nationwide.co.uk/hpi/historical/Aug_2008.pdf
If I am right that the UK followed the US example, and that NZ will follow the UK example, then it won’t be long before we see a similar report coming out here.
May I suggest you watch these three videos on Harrison cycles.
Intro. to 18 year Cycle : http://www.youtube.com/watch?v=_C-Nd_MStxU
Part.1/ Low 1994-2005 : http://www.youtube.com/watch?v=uG3MyE16WBQ
Part.2/ 2005 & beyond : http://www.youtube.com/watch?v=VCEhkJd0zB8
Steve
Steve,
That is a comprehensive portfolio of media coverage. One of the virtues of the modern age of media is the access to a broad range of opinion, in most cases to support widely differing opinions.
I respect the fact that you hold the view that NZ will follow the UK which followed the US.
My view is somewhat different. The UK factors are different to the underlying US factors although borne of the same platform instability of credit. NZ has its own issues which are credit related. Only time will tell as to the final impact on NZ. For me, I prefer to wait and see the outcome rather than try and predict it – in the meantime I will continue to highlight what I see are important lead indicators of data presented from within the website.
Alistair,
You do a fine job of supplying information.
I may have missed it, but have you done any analysis on the change of prices being advertised ?
Looking locally I am seeing a lot of “reduced” and “owner says must sell quickly”. One recent advert in a leaflet mentioned a drop so huge I couldn’t quite believe it. It appears the owners are really needing to sell quickly, but a 20% drop in price on a very nice nearly new property shocked me.
I know there are some websites that track price changes on real estate websites in the UK. As far as I know we don’t have that here in NZ.
The reason I ask is that the numbers coming out from REINZ and QV don’t reflect the real prices I see being advertised now. I know they are very lagging indicators, but it would be good if we could all see up to the minute information on current sales prices.
Such a facility would also be I’m sure of great interest in years to come when advertised prices start to rise again.
Another query I have is with the Fiat Punto “free $24,000″ car advert. Is the “free” car going to be reflected in the REINZ and QV statistics ?
After all it would be very bad if the statistics were corrupted by such offers wouldn’t it.
Keep up the good work.
Steve
Steve
I am aware of the reports from specifically UK websites sighting median listing price. Whilst I am interested in this and naturally have undertaken a review of our data, we suffer from 2 issues. Firstly and most importantly – a large proportion of properties are featured with no specific price and the underlying range can be larger than a couple of percentage points. In this situation we do not actually receive notification of price changes, agents tend to see the web rather as a database rather than a powerful marketing tool – which we continually highlight to them – maybe in time.
The other issue is pretty close and that is robust data with around 5,000 new listings per month and a proportion of them without a set price the medians can be erratic whereas in the UK more properties have a specific price and there are upwards of 80,000 listings added each month.
Thanks for the feedback – that is what this is all about.
Steve
I almost forgot the question in relation to the incentive of a car. I am not aware of this in specifics, especially as if it is being handled through an agent. The question is best answered by the Real Estate Institute as they collect the data.
Thanks Alistair.
I am amazed that so many adverts have “by negotiation” or “poa”.
I am not the only person I know of who will just skip those adverts.
Maybe the real estate agents who read this would like to put their point of view on that.
I know the price can only be an indication, as the final sale price will be determined by the market, but to give no indication I find most annoying.
Steve
PS I made a mistake when calculating the % in a previous post. The price was actually reduced by 8%.
PPS I believe all Horncastle homes have a “free car” promotion on them. I take your point. You do not represent the REINZ.
Steve Netwriter,
I wrote about “no price marketing” on my blog a while ago. Hope this helps:
http://stevekoerber.wordpress.com/2008/03/02/coping-with-no-price-marketing/
Thanks Steve, I’ve left a comment for you
Thanks for your comment Steve, you make a very valid point regarding a lack of info like floor area etc. I agree that would help buyers enormously and will put more effort into providing that stat and others on my listings.
You alluded to the fact that, as a buyer, you have an enormous number of listings to wade through, and pricing helps you to narrow down your search. From your perpective it would save you time, and time is precious. I agree, if everything was priced, buying would be so easy wouldn’t it.
Pricing is the norm in places like the UK and USA. Buyers there expect and get prices on listings all the time. I often wonder, if I moved to the USA and sold houses, how would buyers there react to a more Australasian-way of pricing. Would USA buyers bother to call me about a listing that says “by neg” or God forbid “auction”?
When I think about whether they would call me I sense the answer is Yes! This is because I would present properties to the market there in a much more appealing way than they do (generally speaking of course). Firstly, I would always use professional photography. I would tell buyers that my seller wants a result in less than 4 weeks (not 4 months)(don’t they all?). When people called me to ask “how much” I would ask them “how much are you spending and what have you offered on?”. I wouldn’t waste their time and they wouldn’t waste mine. If my listing was over-priced I’d be wasting their time wouldn’t I? If my listing wasn’t in their price range perhaps I’d find them a home in their price range. If I was lucky, I would get two buyers looking at my “not over-priced (because there is no price)” properties at the same time. Those two buyers might compete to buy it and one might buy it. Then the seller would get what they wanted, or what the property is actually worth, or perhaps more. And the other sellers would continue to try to sell, with their asking prices, waiting for an offer. They would all think that they need an asking price to sell. And that price should be realistic, they’d tell you. The sellers who gambled with the Kiwi agent who suggested “no price” would be laughing all the way to the bank, and the buyers who rang that agent and asked “how much” would probably both be living in their recently purchased dream homes. Who knows?
“POA” and “by neg” is a waste of my time. It generally means “over-priced turkey” (a common derogatory term in real estate circles). In my view it means that the seller’s price is too high and the agent is afraid of scaring people away.
Actually, speaking of wasting time, maybe people should make a game of finding this kind of property. And then making a 10% written offer. Since by law all written offers must be presented, it would be a slap in the face to the vendor and maybe make them see reason.
Yardiff
In my experience “POA” and “by neg” doesn’t mean OPT. It means sold ahead of OPTs. In my world, I waste a lot of time-waters time, but I sell a lot of property to people who really want to buy (as opposed to selling to time-wasters). Yardiff, are you an agent or a buyer/seller?
Steve -
In response to your comments above about using the POA and auction methods I might be able to give some insight as to its success. I’ve been on both sides of a few transactions in the SF Bay Area – although I’m not a real estate agent. ‘POA’ as far as I know is unheard of when listing a house. Even the most expensive homes list a price. I personally find ‘POA’ irritating and tend to ignore such properties. ‘POA’ to me says the the seller is has something to hide. As an American my reaction is “Just tell me what you price you want – don’t make me waste my time calling and asking”. I suspect that others would have the same cultural reaction… but I suppose you never know.
Auction is rarely used and when it is used it signifies the seller is desperate. Perhaps that’s a valid strategy in some circumstances. If you used such a technique in the US it would pay to be aware of the cultural baggage.
What I find odd in the NZ real estate world is the bloated hyperbole that agents use to describe listings. It’s so prevalent that it rings false. It’s something akin to the announcer on Harvey Norman commercials. But again perhaps this is a subtle cultural difference. As I get older I want to cut through the b.s. and get to the figures.
Thanks Hans, I totally understand your point. I’ve noted that in the USA, property descriptions are less descriptive with no “bloated hyperbole”. Just facts, bedrooms, lot size etc. A bit like buying a car off a used car lot really. Mileage, engine size, seats…that’s about all you need to know to make a buying decision.
Imagine if car yards started writing ads like this – “This massive family V6 is offered for sale for the first time in 3 years. Blessed with grey tint automatic windows, plus three pristine ash trays that have never been used, your dogs will drool at the sight of the fully lined rear cabin with mesh partition, perfect for those lazy summer drives along winding country roads, etc….”
One reason car yards don’t write this stuff is that a car is a car. And in many parts of the USA (with exceptions especially SF!!), a house is a house. In NZ, and especially in my area, side by side houses can be incredibly different. So I think much of our hyperbole was borne of this subtle difference in our markets.
Yes, compared to the USA we probably go over the top quite often, but NZ ad writers (listing agents) often get 100% of the commission and they have major motivation to make a property stand out from the crowd by highlighting its features and benefits. Buying a house is usually (I’m sure you’ll agree) a much more emotional event than buying a car, hence our challenge is to appeal to the emotions of the correct target audience. Sometimes it works, sometimes it doesn’t.
My opinion is that the taking of some basic photos and displaying a list of bedrooms, bathrooms, vendor motivation, etc is a little bit too easy. Anyone could do that really.
It’s interesting to see how the two systems in two different countries have evolved to their respective levels. Bottom line, I guess, is that both can and should learn from each other. Thanks for your input, I’d be keen to hear any further comments from you.
Sales for Aug even lower:
Sales Numbers for 2008
Jan 5,186
Feb 6,356
Mar 5,129
Apr 4,464
May 4,372
Jun 4,305
Jul 4,489
Aug 4,220 <— Lower even than June.
Steve
Sales Numbers for 2008
Jan 5,186
Feb 6,356
Mar 5,129
Apr 4,464
May 4,372
Jun 4,305
Jul 4,489
Aug 4,220
Sep 4,499
Alistair,
Unless I’ve missed it, surely it’s time for an update to this article.
So is the market recovering, or is it still getting worse ?
Have all those emails led to sales ?
A local real estate agent I was talking to the other day cannot understand why the figures being reported in the media don’t reflect the prices she is seeing. She has seen bigger price drops.
I wonder whether that is a good topic for an article. How do the official figures compare with reality on the ground.
Steve
Steve
Thanks for bringing attention back to this summary. There is no doubt that the circumstances of the past month has been far beyond what people would have anticipated when this was written back in August. The market is in a state of shock at the moment and I think the figures for October will be a surprise to many as they could well be showing some of the lowest figures recorded.
I will put some stats together in the next week.
You may be intereted to know what’s happening in other markets, for example the Irish online property market. See
http://www.daft.ie/news/2008/daft_audit_september_2008.daft
Anne Marie
Nice to get your insight into the Irish market, The Irish seem to have a keen interest in NZ – Ireland is in the top 10 countries visiting our website – equally I know a large number of kiwi see Ireland as a great place to live and your excellent website profiles a rich source of such information.
Alistair,
You hit the nail on the button there. Coincidentally enough my partner is a Kiwi! Great site of yours, NZ certainly appeals from a lifestyle perspective (and the property is relatively cheaper than here too!)
Anne Marie
Thanks for your contribution – great to get a diversity of opinion.
Here we are in March 2009, with property prices going south with no sign of slowing, what say you now about all those stupid graphs and stats attempting to deny what was happening.
Mike
There is well know phrase of “20/20 hindsight” – looking back to this article now with the benefit of that hindsight I can clearly see the fallacy of the early call – the market has not rebounded. There are however a couple of important points to note:
1. A blog is a far more open and transparent medium than a newspaper – they are as guilty of early calls to predictions – the important thing is to admit the inaccuracy and move on
2. The market did change unexpectedly and significantly in mid September with the collapse of Lehman Bros. That impact was reported on this blog in this post in November.
3. These are exceptional times and there are very few professional economists that are prepared to predict the future. Reading my post above I did not say that the market had turned and that price would rise and sales would grow. I merely highlight what I saw in the stats. I think my closing sentence said it all:
“the analogy I would use to describe this warming of the market is the kind of slow and steady warmth you apply to frostbitten body-parts to avoid amputation!” – I was not saying everything would be fixed.