The statistics released by the Real Estate Institute (REINZ) yesterday focused on the record median price – $360,000 – stating in the article:
“Real Estate Institute of New Zealand President Peter McDonald says it’s an appreciating market fuelled by a shortage of properties for sale but is looking optimistic for 2010″.
The other half of the story relates to property sales number which were 4,957 in the month – these sales figures are the 3rd lowest in the last ten years for December which is naturally a quiet selling month. The best December ever was back in 2003 when 8,669 properties were sold.
The more concerning fact behind the numbers is that through the last 6 months; year on year comparative monthly sales have been steadily building on the very low sales base of 2008. Through the period from April to November the volumes compared to 2008 was averaging increases of 40%. In September sales were up 44%. However the December sales at 4,957 was only up 15%.
What is more concerning is that a year ago we were experiencing the low point of sales volumes as a result of the global economic recession and the slow down of the NZ property market. This was acute in the 3 month period of November, December and January last year. So in theory we should have seen a sales volume in December more of the order of 5,500 rather than 4,957.
The reasoning behind this view is seasonality. December is on average 7.3% of all annual sales just as November is a bigger month representing 9.1% of annual sales on average. Taking the last 6 months of seasonally adjusted sales prior to the December figures the calculations were all pointing to a total annual sales for the whole of 2009 of 75,000.
The input of the December stats resulted in the total for calendar year 2009 of just 69,629 just 24% up on the all time low of 2008 of 56,128.
To provide a view and perspective of the current sales volumes the graph below tracks the seasonally adjusted 12 month moving average sales volumes over the past 5 years. The key periods of the market have been highlighted to bring clarity to the market movements.
- The strong sales period – through 2005 and 2006 with sales in excess of 100,000 per 12 month moving average
- The downturn which started midway through 2007, bottoming out in March 2008
- The flat period through most of 2008 averaging just 55,000 per 12 month moving average
- The Spurt of activity in the first half of 2009 before what has been another leveling off leaving sales at this 70,000 12 month moving average level, before the recent fall off over the past quarter relative to seasonal averages.
Just for clarification this chart is developed by weighting each months actual sales to the seasonal average representation, with the average based on the period 1992 to 2009. So for example taking December 2009 with 4,957 sales – December on average represents 7.3% of all sales of a year therefore in theory this sales volume for December would extrapolate to a 12 month equivalent sales volume of 68,084 sales
I guess that every area is different. In Pt Chevalier there were an average of just over 9 sales per month yet in December that surged to 15 sales – well above the monthly average for 2009 – quite an unusual occurence.
Sales volume at 112 was well down for the year compared with the usual 150 sales but well up on 2008 when there were only 86.
The interesting thing is that this shortage of quality stock has seen a 17% price increase in the last quarter compared with the first quarter:
$580,000 in the first quarter
$571,250 in the second quarter
$629,500 in the third quarter
$686,750 in the fourth quarter
2010 will be interesting – on the 15th of January 2009 there were 56 homes for sale in Pt Chevalier and nobody wanted them. Many were withdrawn from the market as sellers refinanced at rates below 6% for 5 years fixed and then the supply of stock dried up.
At the 15th of January 2010 there were only 18 homes available in the area compared with the 56 in 2009 – a massive turnaround year on year.
So supply and demand may see prices go even higher through 2010 but at a much lower volume as people seem to be happy to stay where they are for another 4 years at their low fixed interest rate and will not sell unless we can find them an alternative home to purchase.
It would be interesting to hear views from other regions or suburbs.
The discussion we had about your June analysis showing the % of houses sold each month may be worth extending to review where we are now. I suspect the sales volumes have not come up to the average however and this may be due to the lack of apartment construction due to recessionary pressures on developers, after-all a sale is of any property, so a “house” can be a shoebox or a mansion.
Ross
The data for Pt Chevalier clearly demonstrates the nature of this industry – local, the aggregation to the national level is useful as a guide but ordinary people buy and sell in local markets and as you have shown the local market can vary from the national perspective enormously.
John,
A useful reminder – I have been tracking the % of all dwellings that are sold and I can tell you the numbers remain very low. I will post the latest graph shortly.
Looks similar to my Wellington Urban comparison (removes the REINZ inclusion of rural areas out of normal commuting range), except by including older data, it can be seen that the sales levels were not just a boom period phenomenon and the drop to current levels could be longer term in Wellington.