The Unconditional Blog

The impartial voice of the industry


Facts on the volume of property sales

Posted on: August 9th, 2010 | Filed in Buying / Selling a home, Featured, Media commmentary

Global Economy and Housing Meltdown around the WorldThe headlines today were focused to what is variously called a “stalled housing market” or the “Do nothing” housing market. However as is often the case, it is really important to look beyond the headline and rhetoric, and examine the facts.

The housing market has slowed enormously in the past year as measured by sales volumes. The trusted and consistent statistics for property sales come from REINZ. The Real Estate Institute collect sales data from all licensed real estate agents across the country on a monthly basis to provide their monthly report. Somewhere around 90% of all properties sold in NZ are managed by licensed agents giving the Real Estate Institute a very accurate representation of the current market transacted in the past month.

The latest data to hand from REINZ is for June 2010. In that month 4,575 property sales were recorded – down 24% from June 2009, however up 6% on the June 2008 sales results. For the first 6 months of 2010 a total of 29,844 properties were sold, as compared to 34,169 in the same period of 2009, a fall of 13%.

REINZ sales data

Clearly the table above shows the market in a very low state of activity, and potentially July sales figures could show a further year on year decline when the July figures are published on the 13th August, however what was most interesting in the articles on the market today was the quote by Research Director Jonno Ingerson

“The number of house sales in recent months has dropped around one third from the same time last year, and is also around one third below the long term average. We are now approaching similar levels of sales as during 2008 at the height of the recession”

The quote is very interesting as it was not backed up with any factual sales data, nor has QV in the past referred to sales data. QV undertake their analysis of property prices based on Land Transfer documentation, this data clearly includes sales stats, however as the data set of these recorded sales is based on settlements rather than unconditional transaction records the data tends to cover an extended period which may span a couple of months given variable settlement terms.

To enable people to make informed decisions as to the state of the property market requires accurate information, if QV has a more accurate and up to date insight into the property market it would be great to see this information, especially if it does highlight sales down by 33%. I will naturally be very keen to anlayse and share this new transaction data on Unconditional, so I look forward to a response from QV to help provide insight if this data.

Article Discussion

  1. Che says:

    Thanks for the analysis Alistair. I also noticed that quote and thought it was a little off.

  2. Steve Taylor says:

    Maybe it is the difference between the (REINZ) data when selling with an agent and QV data, which includes private sales. Maybe more people are selling this year using agents.

  3. JohnB says:

    QV have been providing comment without substantiation for well over two years, I prepared an old chart showing their comments on the Wellington market compared with their own facts on Wellington published with their comments. It shows the Wellington market, almost always, moving in exactly the opposite direction to that claimed each month.
    The latest statement on Wellington is equally nonsense, commenting about the market falling here, whereas the movement is neither up nor down (although measured up a tiny bit) and by their own stats has not moved in price for seven months after hitting a new peak, especially if you add any statistical error allowance. Note my chart below also includes a good comparison of the similar stats for REINZ, showing the similarities.

  4. Steve

    Thanks for the suggestion – however the key point is REINZ have not released any data yet for July and yet QV is commenting on July sales.

  5. JohnB

    I see you are more blunt in your blog post article – maybe I am too polite! – thanks for sharing your insight and opinion – very valuable

  6. Alistair Helm says:

    Whilst we may not have got via QV an explanation as to the source of the data, I am as ever hugely grateful to Bernard Hickey for doing what he does best – a bit of investigative journalism in his Top 10 report from the 10th August.

    He got Jonno Ingerson of QV to admit that “he had assumed sales of about 4,200 in July” – he explained that he had “estimated what he expected July sales volumes to be”

    “I did this based on data we already have (which is more recent than he suggests), plus based on what the QV Valuers are hearing in the market from real estate agents, plus other evidence like Barfoot’s release for the Auckland market, plus the RBNZ home loan approvals series, all of which point to a further decline in sales volume for July.

    That being the case then volumes for the three months to the end of July will be about one third down on last year and more like 40% down on the LTA (long term average).”

  7. andyh says:

    New record all time low sales volume for July month at 4,411 (REINZ data).

    Looks like QV weren’t out by much.

    Too many agents chasing not enough volume = ?

    I imagine there are a fair few who wish they had not jumped back into the industry following the dead cat bounce of late 2009.

  8. Andrew Burns says:

    I was waiting for someone to point that out. It would be nice to see another (reminiscent of 2008) Andy H vs Alistair H debate on the state of the market.

  9. Alistair Helm says:

    andyh – there were certainly pretty close to the money, although there 33% decline would have seen a sales volume of 4,200.

    Andrew – Whilst I would not hesitate to participate in such a debate I am not so sure today that the general consensus would be that different – the scale of the decline might be the key difference!

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