The Unconditional Blog

The impartial voice of the industry

 
9

Have signs of distress left the property market?

Posted on: July 14th, 2009 | Filed in Website searching

There must come a time in any cyclical event, especially one as cataclysmic as the one now described as the “Great Recession” when the dissenting voices start to believe that there is a bottom and we may have reached it. Today’s headline from Bernard Hickey certainly alludes to that “Economic weather report: Car sales weak, but green shoots showing“.

A key indicator of the consumer psyche of the property market can be read in many ways – one of which is the number of property searches undertaken by keywords on this website.

The past 6 months has seen a steady decline in searches for the keywords that best describe the negative sentiment that was so prevalent in the latter part of 2008 and early 2009.

Desperate / must sell / motivated / urgent

These 4 words alone were generating well over 150 searches a week back in the first quarter of 2009 – today that total has fallen to around 80 a week.

By comparison the keyword of mortgagee is still the #1 searched word – last week a total of 742 such searches were carried out on the site, in the first few months of this year that weekly total regularly broke 2,000 searches a week.

As to the real estate industry’s propensity to insert these words into listings – here are the totals on the site today and the comparison back 6 months ago.

Desperate: 67 listings – down from 93

Must sell: 2,527 listings – down from 3,269

Urgent: 344 listings – down from 436

Motivated: 1,080 listings – down from 1,377

Article Discussion

  1. Tom Butlin says:

    Nice one Alistair. There is truth in the numbers, as you are measuring real behaviour rather than asking for predicted behaviour or opinion (eg a survey of confidence, which is valuable, but at a different level)
    If you ask someone if they would jump into a flooded river to rescue a drowning child, there would be a big difference between real and predicted behaviour.
    It would be worth benchmarking these against search volume too. If total searches have dropped, then these figures are less significant.

  2. Tom,

    Appreciate the feedback – like the analogy of the real life scenario.

    As to proportion of all searches – happy to oblige with this additional chart which shows a similar trend in the red line.

  3. cam price says:

    Hi Alister,
    I like your style with statistics you produce some good info ,numbers tell the story .good stuff. AS for these economists Bernard Hickey and co and his goofy announcements,changing from 30% to 15% .More wisdom at the zoo……..In the past when have they been right.
    Interested to know two major factors maybe your resources can help.
    1, Baby boomers set to retire in 2010 shorly this will have a positve impact on the bleek employment figures as they set to retire in the droves.
    2, majority of fixed mortgage holders from when rates were 10% fixed for approx 2 yrs.
    are due to expire soon giving hundreds back a week .When is this approximate date?
    3, southlands future. With ownership affordability, and minerals like coal seam gas,coal,silicon,lignite,gold,dairy and oil ,in years to come with mining tenamenets rising sharply this place could be supporting the economy and jobs. Exxon moblie is keeping pretty quiet about seismic research data it originally said would take a year to analyse.If its anything like the west auz boom .Im excited. Some of the small quart acre blocks in the little southland towns were going for $500 to $8000 3yrs ago now not much under $18000.Thats massive growth through a world crisis. Pretty plain to see where prices will go when oil is announced alone
    With a shortage of listings, and no one building homes,All we need is job security …..
    keep up the good work and look forward to reading more or your worthy articles
    cam price an optimist

  4. Cam,

    Appreciate the feedback.

    As to the questions, well the reality I suspect with Baby Boomers is that as a generation I think they will be reticent to retire – they have a sense of looking to maintain gainful employment so I suspect that there will be no conspicuous mass exodus from the workforce.

    I do not have any stats on volumes of fixed mortgages – sorry

    The issue with the opportunity of Southland holds a great future for the region and the country – we just have to wait for announcements.

  5. In Central Auckland suburbs there is no real need to use urgent/desperate/motivated type words as homes are selling fast and in most cases for more than was offered for them late last year or earlier in 2009.

    It is now the buyers who have become desperate and motivated and in our case we have hundreds of them registered but only one home left to sell.

    Our last four homes took less than 10 days to sell whereas this time last year they would have taken 3 or 4 months.

    So probably likely that the line on the graph above will track steeply downhill over the next 6 months.

  6. With regard to distressed sales I attended a Westpac Bank mortgagee sale being held by a local real estate office this afternoon – you can see pictures at http://www.nz.open2view.com/tour/photo/204347/1

    This was the middle home of three new homes that were constructed on the site at 239 Meola Rd and has been vacant for about 3 years. The front one sold in April 2006 for $830,000 and the rear one sold in July 2008 for $805,000.

    I was surprised how few people were in attendance at the auction as it had gone through a high profile marketing campaign, but bidding opened at $600,000 and four bidders in total increased the bids.

    The auctioneer stopped the auction saying that it was below the bank reserve price. He came back and the house was finally passed in and I guess attempts were then made to negotiate with the highest bidder who stopped at $690,000.

    Not sure if it has since sold but the highest bid was $115,000 and $140,000 below the previous sales in the same complex of the front and rear homes.

    I wonder what percentage level of discount most mortgageee sale buyers are actually looking for? In this case the house was empty so buyers were at least able to inspect it and it was a pretty substantial 5 bdrm, 3 bathroom home with sea views and quality interior.

    It made me wonder if all the recent publicity on TV news about mortgagee sales not including chattels, fixtures and fittings etc has put many buyers off mortgagee sales.

  7. Ross,

    Great detail which provides a good insight into the local market.

    I could not help but have a look at the property, I have to say that the reason I would judge that it is not selling (and this is merely my opinion and is made with no detailed knowledge) is that monolithic cladding has all the hallmarks of risk!

    A house that has never been occupied on the market for 3 years – must be very difficult to sell and unfortunatley for the buyers of the other 2, the market price irrespective of being mortgagee or a static price market has to be a fair discount to the prior sales – that is not an expert’s opinion.

  8. It was a plaster system with a cavity and has it’s final code compliance inspection and been through 3 winters so you would expect any issues may have started to show by now.

  9. Valuable insight Ross – thanks

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