The key metrics of the current property market reflect a very stable position – stable asking price, stable level of inventory and stable levels of new listings. Whilst this is a far better position for the market than a year ago there is concern that the slight rise in new listings seen in July matched to a similar level in August may not be sufficient to meet the demand being seen in the market at this time.
Spring is one of the most active periods of the year and with constraint of new listings; the market may not be able to meet this demand without consequential impact on prices. However this scenario is as yet not being witnessed in the asking price expectation which remains steady and still represents a 7% decline from the peak of the market.
This sentiment in the market is reflected in the comments of real estate agents. Mike Elford, President of the Real Estate Institute of NZ (REINZ) commented
“The market has certainly recovered well from the lows of mid-2008, and heading into spring could well see some more healthy activity, however as ever the market is reliant on an adequate inventory of listings to meet buyer expectations“
Asking Price
The vendor’s expectation of asking price for properties coming onto the market in August remained stable with barely any change from the prior month.
The truncated mean price for the 10,644 listings added in the month was $397,187. This represents a 0.8% fall in asking price when compared to the moving average of the past 3 months (May/Jun/Jul).
The asking price of new listings in August last year was almost the identical asking price of $397,053.
New Listings
The number of new listings coming onto the market fell to 10,644, from the July total of 10,773. This was below the expected level anticipated as a result of Spring seasonal upturn.
As compared to August last year when there was 10,860 new listings added to the market, this past month represents a fall of 2% from a year ago.
The graph provides a view of the continued relatively low level of new listings coming onto the market this year.
Inventory
The fairly flat level of new listings matched to steady sales level the available inventory (measured in terms of “the number of weeks to clear all the stock of houses on the market) rose very slightly to 32.6 weeks.
The level of inventory on a national basis is up considerably from the lows of 2007 (24 weeks), but down considerably on the highs of 2008 (50 weeks).
Regional Summary – Asking price expectations
The asking price expectation of vendors steadied across the regions in the month of August with 10 of the 19 regions showing asking price falls, however only 8 were greater than 1%.
There were 4 regions – Northland, Gisborne, Marlborough and the Central Otago / Lakes district that showed asking price declines of over 5%. The nationally asking price moved only marginally down 0.8% as compared to the prior 3 months.
The main centers of Auckland and Christchurch showed virtually no asking price movement whilst Wellington showed an increase in asking price of 2.6%. There were only 2 regions showing asking price expectation rises of more than 5% – Central North Island and Manawatu / Wanganui.
Regional Summary – listings
The level of new listing across the regions reflected the national picture with most variances to August last year of the order of less than 10%.
Of the 19 regions only 8 showed increases in new listings; only one of which – the Waikato showed an increase of 20%.
In contrast 3 regions – Central North Island, Manawatu / Wanganui and Marlborough reported listings decline of over 30%.
Overall the sentiment of the market is stable with a slight leaning to a sellers market especially given the lack of year on year increases of new listings. This is especially relevant when viewing the very depressed state of the property market in August 2008.
Regional Summary – inventory
As a consequence of the lack of new listings rises anticipated with the oncoming spring seasonal, the inventory levels continue to hover at low levels. Nationally at 33 weeks down 34% on a year ago.
The chart attempts to estimate the propensity of region to be experiencing a buyers or sellers market based on inventory as compared to historical averages.
In overall terms there is a sense of balance in the market between buyers and sellers with the majority of regions showing levels in line with long term averages. The key centers of Auckland, Wellington and Christchurch however still show continued signs of low inventory including Wellington which continues to hover at around just 15 weeks.
The regions of Coromandel and the West Coast continue to show signs of high inventory.
Lifestyle
Similar to the picture for total listings, lifestyle properties added to the site in August fell short of the pickup seen in July. For the month 886 listings were added a 1% increase on August last year.
The truncated mean asking price expectation from vendors of lifestyle properties in August was $553,347 a 3% decline over the preceding 3 month average and a 1% decline in the same month last year.
Regions showing consistent increases in inventory were the Bay of Plenty with 85 new listings, more than double August last year and 15% up on the rolling 3 month average. Equally the Coromandel continues to show increases of 47% up on prior year. Finally Manawatu / Wanganui with 76 new listings was up 27% on prior year. Regions showing consistent falls in new listings were the Hawkes Bay, Taranaki, Otago, Marlborough, Wairarapa and the Central North Island
Apartments
The apartment market shows steady levels of new listings with 595 added in August representing a 13% increase on the prior year. Again Auckland dominates the apartment market and with 369 apartments listed in the month showed a 19% increase from August last year.
The asking price of apartments nationally in July fell 7% from the prior quarter average to a new level of $368,291. As compared to August last year the current asking price shows a decline of 7%. The asking price of Auckland apartments in the month was $335,792, down 6% on last year.
The full report can be downloaded here (1MB pdf document).
The next NZ Property Report for September 2009 will be published on Thursday 1st October at 10am.
Great report yet again Alistair. This is real value to sellers, buyers and the real estate industry. As I have always said facts are the key to good decision making, or in Disney Langauge, show me the data!
Well done to you and the team.
In the Pt Chevalier and Westmere areas of Auckland buyer interest in the last few weeks has been as strong as anything seen in the 2003 to 2007 boom period.
Two weekends ago I launched three new listings and each had over 100 people through the open homes. All received multiple offers and were sold by Sunday night – with offers not just from local people but also from far flung places like London and Dubai.
We now urgently need at least 25 bungalows in the local area to satisfy the demand from all the people who missed out.
I’m not sure that there will actually be very many Spring listings as by late August we usually have a fair idea of what’s coming up in September and this year potential listings are looking like being lower than ever. Perhaps October will see a surge once daylight saving and better wetaher kicks in.
If listing levels stay as low as they are prices may see an increase along the lines predicted by Infometrics a few weeks ago.
I don’t get this “shortage of listings” theory.
The report says there were 10,644 new listings in August and 10,773 in July so that’s over 21,000 new listings and at the same time total sales in July/August will be approx 12,000.
This would seem to indicate that listings are accumulating rapidly and that there is a growing stockpile of homes available.
There are about 4,000 more new listings each month compared with the 6,000 that are selling. The shortage must only apply to certain areas as there seem to be tens of thousands of homes for sale across NZ.
It makes no sense – are many sellers giving up and removing homes from the market?
What’s really happening?
Russell,
To assist comprehension here are the full numbers. At present there are around 6,000 monthly sales reported by the Real Estate Institute by members – this represents around 85% of all sales.
In August there were 10,644 new listings added to the website, this represents the listings of around 93% of all licensed real estate offices.
Properties get listed and then withdrawn, some take many months to sell and some are listed by more than one agent.
The point about inventory levels is relativity – a year ago sales per month were around 4,000; new listing coming onto the market in August were 10,857 and the number of properties on the market was 50,041.
A year later the number of properties on the market has fallen to 46,046 – the sales have increased to 6,000 and the number of new listings are down slightly to 10,644.
There is in most countries an available stock of around 30 to 36 weeks of sales. At this time that level is 33 weeks – a year ago it was 50 weeks. That is the key indicator as to whether this is a buyer or sellers market. At the moment the movement is towards a sellers market.
Hi Alistair,
I have a question. The website lists 10,665 homes for sale in the Auckland region. At a little over 2000 sales per month there is 5 months of inventory on the market, about 150 days. How therefore can the median days to sell be only 33 (as listed on reinz.co.nz).
Another way to look at it is from the listing dates on each property. The median listing date for the 10,665 homes is 11 June, or 83 days ago. The lower quartile date is 18 December 2008 or 258 days ago.
How can you make sense of these figures? It seems to me that either only very recently listed homes are selling at all, or the 33 days figure is wrong.
I suspect the median listed date (83 days) is a more reliable measure and it would be interesting to monitor that over time.
Cheers,
Robert
Robert,
A fellow analyst!! – I love the approach and question you have raised.
The data you highlight on the website is naturally based on he key dates of when the listing is first received from an office listing that property. I must admit I had not looked at this very transparent data!
The key data is actually the REINZ stat of the “median number of days to sell a house”. The data this is based on is not a complete picture of the true property market. Here is why:
House A : listed by agent Y on 1st January and sold by agent Y on the 23rd January = 24 days to sell.
House B : listed by agent X on 1st January, after 6 weeks the seller decides that as agent X has not sold the property then they will try it with agent S. Agent lists the property on 12th February and sell the property on the 26th February.
Now REINZ request all agents to submit sales data each month detailing what they sold – how much for and how long that listing had been on the market.
In the scenario of Agent S – they state that they sold the property after the property had been on the market for 15 days.
Now this clearly can lead to an inaccurate figure but before everyone denounces the REINZ data, couple of points:
1. This data is consistent – this approach has always been reported the same way for 20 years so there is comparability
2. There is no current other method, and better to have this data rather than none at all
3. A large number of houses are sold by the original listing agent.
Now the good news – we are working with REINZ to integrate our data to provide full transparency of the true data of how long was the property (rather than the listing) on the market.
Thanks Alistair. That explains the 33 days. And presumably most properties that are on realestate.co.nz, got there pretty well when they first went on the market, so the first listing date is fairly reliable. I was amazed that 1/4 of Auckland properties have been listed for 258 days or more! A big chunk of sellers “refusing to meet the market”, presumably.
Perhaps I should start a company making lowball offers on properties based on their listing date…
Robert,
Two small points of clarification – well actually just one, but you will see my logic.
Every listing that appears on realestate.co.nz comes to our site either as a data feed from individual offices or as an individual agent entering a listing in our back end system. The vast majority naturally are data feed.
Upon reciept of a listing we uniquely identify (URL #) and date stamp the listing. In this way if there is any changes we can accept changes without effecting the “listed date” and we can also track changes.
Therefore when it says the property was listed on the 6th of May – that is the day we received that listings.
Now listings stay published on our site until in the data feed the office notifies us to cease publishing the listing, or in the case of direct entry they remove the listing. This means for any reason a listing is sold and the data feed does not notify us we have no way of knowing this. It is not our role to audit listings. We do periodic notifications of older listings to check if they are still active, however it is up to the office to make a change to remove a listing.
Hope this helps.
Hi Alistair,
The 7% asking price reduction from Oct 07 to Aug 09, i have a question that I’m wondering if you can hep with?
Does the Aug 07 number derive form the truncated mean method used to calculate the Aug 09 number?
Is it possible to compare the period using BOTH of the methodologies to get a range of asking price drop?
Or adjust the Oct 07 using the truncated mean?
Bob
All the asking price metrics quoted in the report have been calculated using the same truncated mean methodology and therefore are comparable.
We do have the median price for each month as well as the truncated mean. To provide a comparison between these two metrics here are the numbers for Oct 07 and Aug 09
Median asking price: Oct 07 – $399,000 Aug 09 – $369,000
This shows a 7.52% decline
Truncated mean asking price: Oct 07 – $429,033 Aug 09 – $397,187
This shows a 7.42% decline
Hope this helps to explain the data source and comparables.
Hi Alastair,
Thanks for responding.
I was always slightly suspicious we were getting apples v oranges but understand the comparison is like for like now.
On another note. Is the anecdotal evidence from your members pointing to a property value recovery only in Auckland and that the provinces have a way to go yet?
Bob,
The only true measure of property value recovery or collapse would have to be the sales price data from REINZ. This of course comes out with a natural and unavoidable lag between listing, unconditional sale and reporting.
Clearly we see a correlation between asking price and sale price and on that basis we see the stabilisation of property prices at this time. I would see this as an expected outcome when you balance off the factors of:
1. A weak market – current sales levels are still low on a historical basis – total for last 12 months is only 62,000 which is still some 50% off where the market should be on a historical average
2. Unemployment uncertainty is still a constraint to investment generally
3. Interest rates – based on long term averages they offer an incentive although the trend is likely to be of increases
4. Access to credit is still tight and is a constraint of first time buyers
I see Barfoot’s sales figures are up 65% compared with August 2008. So it looks like there will be some very uplifting REINZ and QV data on the horizon.
http://www.interest.co.nz/ratesblog/index.php/2009/09/03/barfoots-house-sales-up-65-in-august-prices-up-5-in-a-month/
Why is it so difficult to purchase property on Waiheke Island. I have been trying to buy a holiday house on the Island for over 30 years. Every time I made an offer it was refused, even when it was the asking price. What is wrong with Waiheke vendors and Waiheke Island agents?
cti
I am sorry but I am unable to offer any advice, your best option would be to sit down with a local real estate agent on the island and discuss your circumstances.
Are there any Waiheke Island agents that soley list Waiheke properties?
“What is wrong with Waiheke vendors and Waiheke Island agents?”
Ha ha ha, you obviously haven’t lived on ‘the rock’ if you need to ask that question!