Real estate as we are often told is the most expensive purchase you will ever make and one fraught with uncertainty and complexity – an industry turning over $34 billion in the past 12 months, transacted by over 16,000 agents. So why then would you imagine that the sentiment of these buyers and sellers could be so influenced by the media?
Well the fact is that as a function of the unique analytical capability inherent within the web this long held proposition that the real estate industry judges that the media impacts the state of the property market is in fact proven.
The view that rampant speculative buying is fuelled when headlines such as “House prices – the boom keeps rolling ” & “House prices still on rise” appear on our morning desk; and equally when the market is spooked by headlines such as “House sale low is sign the tumble has started” “Shades of the 80s in housing obsession” “Figures confirm property slump bedded in” & “Property market set to crash, says expert” pummelling the market into a nose dive when sales statistics reflect a slowing market.
Well now there are statistics to show that this is the case – well certainly on the downside impact. Analysing the web statistics of this website and several other specialist real estate websites (A total of 7 websites – portals and real estate company websites) produces the following graph.
Most conspicuous is the manner in which the tracking of the aggregate of website visitors fell sharply from the 3rd week of February as seen by the red line representing 2008 to date. This steep tailing off is significantly out of alignment with the predicted seasonal trend shown in the preceding 2 years. This date of late February exactly correlates with the heightened media coverage borne of the January sales figures and the speculation as to the potential for a 20% to 30% correction in property prices.
With this staring point it is clear to see that interest in property started to wane. The key thing here is that these websites’ traffic statistics not only provide a “never-before” glimpse of the true activity of the consumer, but also a true litmus test of the market as the web has fast become the most valuable source of real estate information.
Adding to this supposition is the matched timing to a cooling off of new listings being added to this website from early March, this has resulted in the total number of listings featured on the site peaking at 109,000 and holding for the past 3 weeks. Were as in January and February the stock of listings was growing at close to 1,000 per week.
The likely factor behind these figures is the combination of property being withdrawn by agents and vendors who prefer to “sit out” this stage of the market, combined with owners reluctance to enter this market.
At the end of the day the question is – now that we know this, would we expect anyone to act on it?
The country would not benefit from restrictions of press. The media needs report the market and the facts – it simply needs to have freedom to print and publish what they want; just as this blog strives to provide a balanced and impartial perspective on the real estate market in its totality. In commencing this blog I strive to engage an audience. That is no different from newspapers and other media publishing articles designed with eye-catching headlines designed to catch the attention and thereby sell an audience to an advertiser.
I am just grateful that the consumer nowadays is benefiting from this more diverse media and in that context better able to make balanced judgements – this is an evolutionary trend of the web’s impact on all our lives – maybe in time these trends won’t be so extreme and rational behaviour will return to this most important of purchase decisions.
Talk to any real estate salesperson and they will tell you that market virtually shut down instantly after the barrage of negative media that appeared in the Sunday Papers, on TV, in the Herald etc, etc in the early part of February. The result was a market washout as shown in an item on the TV1 Sunday show
The internet is now swamped with items on the housing market. A Google search of pages from New Zealand for the phrase “NZ housing market” will throw up 32,700 results, many along the lines of “Housing market screeches to a halt” etc, etc.
One of the worst things the NZ Herald has going at the moment is the blog “Do you think there will be a property slump?”
Why do you think the Herald initiative is a bad thing Ross?
Probably only because that one in particular is dominated by some completely over the top “doom and gloomers”
On the other hand that’s just the way it is with these blogs – they are everywhere these days and certainly spread the word fast and wide very quickly, but for the Herald to attach a link from almost every property article that they publish directly to that particular thread seems a bit over the top.
I guess the one positive thing that has come out of the proliferation of “real estate” bad news items is that the transition from a sellers market to a buyers market was far more rapid than it would otherwise have been. So instead of a protracted limbo phase we now have a market that has corrected about 10% so far and most sellers either have to accept it or simply take take their home off the market.
Andy – I see you are a regular poster on the Global House Price Crash Forum
Yep thats me – its a very interesting forum because it emphasizes what we are seeing is a synchronized bust – and serves to ram home the fact that the worldwide bubble was largely a creation of cheap credit, which was then torpedoed by, among other factors, the oil price.
why do you guys see the media reporting real estate news as such a bad thing?
all they’re doing is reporting the REINZ figures and the views of property experts who are predicting a significant price correction
i bet you guys in the industry have been talking about this correction and the slow down long before the media began reporting it, so all they are doing is telling readers what’s going on?
any other way and NZ would be Burma and controlling the media as per the TV footage of burmese cyclone victims getting food, blankets and DVD players despite there being no power.
Andy, given that you are widely read on easy credit, peak oil etc, how about supplying some predictions for us – say in 12 months time what do you think the Quotable Value percent rise/fall will look like, what rate will a 2 year fixed mortgage be, what will NZ$ be vs US$, oil per barrel and price at the pumps in NZ, what will our CPI figure look like etc. Would be very interested in your forecasts.
Molly,
Let me make the position clear here from the standpoint of this website and company as distinct from individual agents.
The media should report the market – real estate is a key part of most people’s lives and accurate and relevant information should be reported. We support the media and this set of research statistics is not out to bash the media.
What I am endeavoring to do is highlight the fact that as an industry greater information, statistics and opinion from this industry is for the betterment of the industry.
The real estate industry has for too long been too constrained in it’s coverage of trends and activity and a more balanced and richer set of information would benefit all – and in doing so raise the profile, credibility, respect and professional perception of the industry and those who work in it.
[...] Horror! Slump! May 12, 2008 The RealEstate.co.nz blog “Unconditional” is reporting that media stories on real estate trends and the effect they have on buyer and seller behaviour has [...]
Thanks for the article – I think the relationship between the media and ‘public confidence’ is an interesting one.
However I have two problems with your analysis:
1. Correlation doesn’t imply causality – you don’t seem to take into account the possibility that the incidence of media stories and the drop-off in interest in websites might both be caused by a third factor.
2. Couldn’t the dips you show in your two graphs be attributed to Easter, which fell around 22/23 March this year?
I see the Herald has twisted your article into a headline “Media to blame for slump, say real estate agents” and started a “new blog” for comments on that item.
Peter
I agree with you that correlation does not imply causality. There could be other factors – certainly a prolonger summer can be a factor as well as general consumer sentiment of interest rate forecast and price of household goods; however I would assert that there is likely to a strong element of correlation between media coverage and downturn in viewings.
As to the earlier Easter – you are right the first big bottom point is Easter, the second id Anzac weekend. The key thing is the trend which headed down well before Easter and was showing traffic below 2007 level by the end of February whereas the year had started at the same incremental growth.
Appreciate your observations.
Thank you and Congratulations to Alistair Helm for coming out with the comment to the media that they are entwined into, and the undoubted catalyst to, the price/volume plateu being felt in the housing market. The journalists have come through an education system that attaches no value to the entrepeneur nor the risks that he or she takes when they use their capital (or leveraged capital) to acquire further wealth. It is the education system of a socialist country.
The bastards are undoubtedly to blame for the position many of us find ourselves in and bravo to anyone in your industry that fights back.
I thought the REINZ days was out today, or have they delayed it because QV published today?
Blimey Ross, now your asking, there are folk that pay me thousands for that sort of information
Real estate – stop whinging, you don’t see stock brokers complaining when the media reports that the share market has tanked, at least stock brokers are probably more balanced with their investments. Most of the real estate sales people I know liken the share market to the casino meanwhile their market has been just that!
Mark – you probably believed everyting that the industry was saying on the way up. Gee how about REINZ blaming slow sales in January being the holiday period or March because there was Easter; as long as I can remember those events happen every year!
Yet more evidence how the feeeeeelthy fourth estate have been pulling down the housing market (this time from the UK – isn’t it odd how the press in such diverse nations as the US, Ireland, Spain, the UK and NZ all got together and decided to talk their respective markets down almost all at the same time; one wonders what their motives could have been?):
oooh I know the press wanted to p**s off the industry that is collectively one of their biggest advertisers, surely that must be the reason?
Sorry Alistair but as you can see from my comment above I reckon this piece is pap. As Peter puts it so well, you have a correlation, but that is all. Still your piece has top billing on the Herald website, so good stuff on the exposure front.
The issue I am endeavoring to portray is that the access to such valuable information that only the web can provide – information that you could never have looked to with such clarity in the past through any other media, and see such clear demand indicators. From this I am trying to engage an industry to recognise the power of the web as the medium for real estate.
The media are merely the channel of communication and I am not shooting the messenger, the messages came thick and fast in February – we all remember that period, just look back through the blog posts and see the dialog – it is not an unreasonable assertion to make that this extent of media coverage had an impact – not proven to be the only impact, but an impact on consumer consumption of real estate viewings on this broad base of real estate websites.
REINZ statistics have just been released.
[...] are now responsible for the property slump. Real estate agent-owned realestate.co.nz states, “the media impacts the state of the property market is in fact proven.” The ‘evidence’ is that visits to real estate websites reduced immediately after the [...]
I have to agree that mainstream media can effect some industry’s badly this may or may not be the case here however I believe industry should work together as a whole and use there own Marketing sites such as this to 1. Push there industry themselves Break there reliance on Mainstream advertising such as papers. 2. Improve Marketing costs which could be passed on to the consumer? Internet Marketing can have a better ROI than other forms of Marketing
I believe long term the Internet will be the way things will go as the same news you get in a paper for around $1.50 per day you can get when you want for free on the Internet so people in the future will be less likely to buy a paper and will research things themselves online including property.
Joel
Naturally I could not agree more with your comment – that was the message. Newspapers are struggling and cannot help themselves be drawn to alarmist headlines to sell newspapers to an aging population – I have a lovely mantra of newspapers are not bought or read by people under 30 – now people under 30 become people under 40 and people under 50!!
Alistair,
An interesting analysis. I wonder though if it would come up with the same conclusions if it included the data from TradeMe/property, which has more traffic than the sites mentioned combined.
My quick look at the Nielsen Netratings data for that period show no appreciable drop in the combined traffic for real estate traffic, including TradeMe, over that period. It’s actually up around 25% from a year ago. The major drop I could see was linked to the early Easter in March.
The only trend, if there is one, is that growth seems to have topped out at the end of February. But is that the same as a slump in enquiries linked to negative media coverage?
You could actually argue that negative media coverage actually boosts interest from bargain hunters, as you’ve seen with your own measures of searches for “mortgagee sales” increasing signficantly.
However, even given the above analysis, isn’t it natural that webt traffic would stop growing if the market slows down, as even the REINZ have acknowledged now.
I think it was wrong for the Herald to characterise your comments as “blaming the media”, but I tend to agree with those who say we’re simply trying to cover what’s really happening out there.
I also acknowlege too that you’re not calling for any sort of censorship. But I’d suggest the traffic stats I’ve seen don’t suggest some sort of media-induced and unnatural flight from the market.
If there’s any cooling of interest, it’s natural and real.
Kind regards
Bernard Hickey
Bernard,
A perceptive observation I agree. To help explain why I omitted Trade Me you need to observe this graph. This tracks the website sessions of Trade Me property matched to the total site – now this hard wired correlation tells me that the traffic to the property listing on Trade Me are influenced not by buyer sentiment or seasonal factors of real estate – but by the level of total audience on Trade Me. As we know Trade Me is The Warehouse of the NZ web and Property as with cars and jobs are just departments – so total traffic through the front door is key to them.
That is the reason for the omission of Trade Me – inclusion would tell us nothing whilst the 7 selected sites have been in the market of Nielsen data for the full period and represent a true reflection of true real estate demand. I really welcome your insight though and your comments. As you say I was merely trying to highlight an association with the objective of demonstrating the power of the web to bring clarity to such markets.
I note the article sourced from interest.co.nz that appeared on the Herald website yesterday “Real Estate body says the slump is here” did not actually appear in today’s newspaper.
There are multiple factors for the cylical ups and downs of real estate and one can not pin
point a single cause, ofcourse the media plays its role to influence the public opinion , this is the function of media. does not the media play role in shaping public views on war, education, economy,climate change,
attitudes toawards crime, sex ,violence, fashion etc ? It is not as simple as just reporting facts,it is not just what is being said but how it is said.The bold headlines make the most impact and most people do not read the full text. Media did not cause the decline in this case but did create panic and hysteria.As expected the masses want to blame someone for any misfortune, I see people on this forum and others blaming real estate estate industry , the fact is people have choice to hire an agent, if all the sellers are so fed up with agents then do not use them.The media has a right to report the facts but thet also have an obligation to repot without bias.
The so called experts used by Hearld and the pseudoexperts on blogs giving unqulaified and unsolicited advices have no credibility and they are just a part of blaming culture. Ups and downs are a part of life, those who imagine life without change (good or bad ) are deluding themselves. Such cycles would continue to be repeated.
Lastly I am not a real estate agent.
[...] Realestate.co.nz Topical, informative and relevant comments and stories related to the real estate industry that hopefully will inform and provoke debate and comment. « Media seriously impacts the psyche of NZ’ers when it comes to property [...]
Ross,
Well spotted. interest.co.nz has sold a feed of its news to nzherald.co.nz for publication online only. The Herald’s own journalists, rightly, spend the day writing up a story to published the next day in the paper
cheers
Bernard Hickey
Its not a bad thing,having media interest(albeit sometitmes manic!)because the REINZ are self governing,and like a lot of agents,would like to believe that theres nothing wrong with the market,hence not reporting why the the house prices continue to rise ie., mainly houses over $6000000 selling!!A healthy open system.
OOps too many zeros!!!
[...] and this week, this subject seems to have attracted a lot of media attention and speculation. The blog post on the correlation between media speculation (no, to be fair and consistent it was not speculation, [...]
I think Olly Newland was about right last night; 95% probably don;t need to sell. As for people who bought sections and expected to make a profit on settlement I say thats just tough. I have heard of people walking away from $60,000 deposits in these situations!
[...] is interesting and quite telling (given the media’s reaction to my prior post on the correlation between web traffic and media coverage of real estate) that the NZ Herald have [...]
[...] If the spike in searching in the first week of the April seems an anomaly – there is an answer, in that week TV3’s Campbell Live aired a piece on the real estate market and highlighted the extent of the growing stock of mortgagee property as well as the growing interest demonstrated by search queries on the site. Within the first hour after the show the level of searching on the site skyrocketed – who says the media do not influence consumer psyche?! [...]
[...] 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 [...]
[...] this year in a post entitled “Media seriously impacts the psyche of NZ’ers when it comes to property” the correlation was shown between the media headlines and visitor traffic to real estate [...]