NZ Property Report – August 2011

The August 2011 NZ Property Report published by Realestate.co.nz provides an insight into the state of the New Zealand property market as measured by the supply side of the property market over the month of August. The key measures of the market analysed in the report are the number of new listings, the asking price expectation for those new listings and the level of inventory of unsold houses on the market at this time. The report is compiled from data captured by the website and represents close to 95% of all property movements in the NZ market as managed by licensed real estate agents.

A full print version of the NZ Property Report – August 2011 is published below and is available for download (1.0MB) and distribution.

Summary of the market – August 2011

The property market is now showing all the signs of gearing up for a much stronger Spring season than has been seen for a number of years. The market is very firmly parked as a sellers market, with inventory levels at lows not seen since 2009. At that time, the low inventory was a result of a degree of a buy-up of distressed properties being sold at attractive prices as a result of the global economic recession. This time around, property sales have been steadily rising whilst listing have been in relative short supply.

Comparing the situation today with just 6 months ago highlights this – back in February the average number of property sales over the recent 3 months was 4,256. In July it had risen by 24% to 5,281. At the same time the number of properties on the market has fallen 15%. Traditionally the month of September shows the start of the Spring season, this year we appear to have seen an earlier rush, potentially as a function of greater economic confidence matched to attractive interest rates or possibly a potential impact of the Rugby World Cup.

The rise in asking price expectation is party explained by a seasonal uplift associated with increase in listing numbers however underlying this and as seen in the charted trend of the past 3 years there is a steady, albeit slow rise in the expected listings price for new properties coming onto the market. This recent asking price expectation is still some 3% below the recent peak of asking price back in April, however the trend is certainly upwards.

Asking Price

The truncated mean asking price for all new listings in August rose significantly from $403,474 in July to $415,0784. On a seasonally adjusted basis the asking price rose by 2.7% in the month indicating that there is an emerging confidence amongst sellers of stronger prices.

There is a seasonal trend that sees asking price rise in the August month each year, this year that seasonal rise is somewhat more significant.

New Listings

The level of new listings coming onto the market in August rose for the first time since March. A total of 10,120 new listings came onto the market representing a 3% year-on-year increase and a more significant 9% rise on a seasonally adjusted basis.

On a 12 month moving total basis the number of new listings in the past year totals 124,544 as compared 144,893 for the same period a year ago – a fall of 14%.

Inventory

The level of unsold houses on the market at the end of August continued to fall from prior months. At the end of there were 44,689 houses, apartments and lifestyle properties on the market down from 45,674 in July and down from 50,138 a year ago. This current level of inventory represents 36.7 weeks of equivalent sales.

From the chart the rate of decline in listings appears to be lessening, however given the rise in sales recently it is not expected that inventory levels will rise in the coming month.

Regional Summary – Asking price expectations

The national asking price expectation picked up in August as expected due to seasonal factors. Across the country this trend was seen in 12 of the 19 regions reporting a rise in the truncated mean asking price as compared to the recent 3 month average. The most significant rises were seen in the Central North Island and the Taranaki regions, up 7.5% and 8.7% respectively. The main metropolitan regions of Auckland, Wellington and Canterbury all saw very modest movements in asking price expectation of less than 1% indicating that whilst there is a sellers market environment property price appreciation is not rampant.

There were 3 regions which experienced significant asking price falls, Gisborne, Nelson and the Wiakato. The latter reporting the lowest asking price recorded going back over 4 years at $328,626.

Regional Summary – Listings

Listings has started to flow onto the market in the last month – making up for a succession of months when listings have been in short supply. The rise is most significant in those regions where the shortage became most acute a couple of months ago.

The three regions of Auckland, Bay of Plenty and Waikato were the first to show a sellers market back in May and that message seems to have got through to property owners keen to move. They have acknowledged that there has been a strong rise in sales and a shortage of available properties on the market, and now seem to be confident to list their property.

Outside of these emerging regions the remainder of the 19 regions have seen a continuing low level of new listings coming onto the market, potentially increasing the sellers market situation as the spring pick up in sales starts.

Regional Summary – Inventory

The NZ property market is now firmly anchored in a sellers market. The shortage of new listings over the past 6 months, matched to a rise in sales has driven inventory level of unsold houses well below long term average.

Across the country there are now only 2 regions out of 19 that remain a buyer’s market – both small regions of Gisborne and Wairarapa. In contrast there are 9 regions that where inventory levels are significantly below long term average.

Across the country by region, the Auckland region at 24.2 weeks is currently experiencing the lowest inventory for over 4 years; Wellington at 19.4 weeks is the lowest inventory for 18 months, and in addition Nelson at 26.3 weeks is lowest for 2 years.

Lifestyle

Lifestyle property listings across the country rose in August with a 22% seasonally adjusted increase to 760 listings. As compared to last year the total still shows a 10% decline. Over the past 12 months there have been 11,061 new lifestyle property listings brought to the market down 12%.

In terms of asking price expectation, the truncated mean in August was $565,753 which was up 9% on a seasonally adjusted basis and up 2% on August last year.

Apartments

New apartment listings shot up in August with 629 new listings coming onto the market. This represents a 51% seasonally adjusted increase and the highest level for over 18 months. At the same time the asking price expectation fell by 12% on a seasonally adjusted basis to $328,777.

In the Auckland apartment market, which represents over 60% of the total market there were 462 new listings which represented an 81% seasonally adjusted increase. In terms of asking price, the truncated mean in August was $302,425. This asking price is down 11% on a seasonally adjusted basis and is the lowest asking price since data reporting began at the start of 2007

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison; however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted below:

Realestate.co.nz data is compiled from asking prices of new residential listings as they come onto the market via subscribers to the realestate.co.nz website. The Realestate.co.nz website currently has over 95% of all licensed real estate offices subscribing and providing all of their listings onto the website. The asking price is presented as a truncated mean price at a 10% interval.

REINZ: data is compiled from reported unconditional residential sales from all members of the Real Estate Institute of New Zealand representing all licensed real estate offices. The sale price is published as a stratified median house price and is developed in association with the Reserve Bank of NZ.

Notes:

Truncated mean

The monthly asking price for new listings presented in this report utilises the measure of ‘truncated mean’. This measure is judged to be a more accurate measure of the market price than average price as it statistically removes the extremes that exist within any property market that can so easily introduce a skew to traditional average price figures.

The truncated mean used in this report removes the upper 10% and the lower 10% of listings in each data set. An average or mean of the balance of listings is then calculated.

Methodology

With the largest database of properties for sale in NZ, realestate.co.nz is uniquely placed to immediately identify any changes in the marketplace. The realestate.co.nz NZ Property Report is compiled from new listings coming onto the market from the more than 1,000 licensed real estate offices across NZ, representing more than 95% of all offices.

With an average monthly level of over 10,000 new listings, the realestate.co.nz NZ Property Report provides the largest monthly sample report on the residential property market, as well as a more timely view of the property market than any other property report. The data is collated and analysed at the close of each month, and the Report is compiled for the 1st day of the following month. This provides a feedback mechanism as to the immediate state of the market, well in advance of sales statistics, which by the very nature of the selling process can reflect activity with a lag of between 2 and 4 months.

In analysing the details of the 10,120 new listings in the month of August, a total of 128 listings have been excluded due to anomalies. The land area of the property defines the categorisation of Lifestyle property. The criterion is a property having in excess of 0.3 hectares and being situated outside metropolitan areas.

Background to Realestate.co.nz

Realestate.co.nz is the official website company of the real estate industry of New Zealand, it is an industry owned web business providing online marketing services to the real estate industry. The shareholders in the business comprise the REINZ (50%) and six of the largest real estate companies (50%).

The business operates a portfolio of websites all focused to specialist sectors of the real estate market:

Realestate.co.nz is the heart of the business and is focused to the residential property market. It features the most comprehensive selection of property for sale and rent across NZ. The website attracts a significant monthly audience of over 400,000 unique browsers, with over 110,000 of those visiting from countries outside of NZ.

nzFarms is a specialist website presenting the most comprehensive selection of farms and agricultural businesses on the market across NZ. At this time it features around 5,000 listings for all types of farms and agricultural land as well as over 11,000 lifestyle properties.

Prime Commercial is a specialist website presenting the most comprehensive selection of commercial property for purchase or lease on the market across NZ. At this time it features over 27,000 listings for all types of properties – retail, commercial, industrial and investment properties.

Prime Business is a specialist website presenting the most comprehensive selection of businesses for sale on the market across NZ. At this time it features over 4,300 listings for all types of businesses – retail, tourism, wholesale as well as franchise opportunities.

Zoodle is a specialist property information website providing very detailed data on all residential properties in NZ. The database comprises over 1.6m properties with detailed specifications, map and local amenities. The site provides online reports for free and for purchase covering valuation and legal information to greatly assist the needs of property buyers and sellers.

The web business of Realestate.co.nz site is the most comprehensive real estate web operation in NZ, currently hosting over 110,000 listings, covering this portfolio of residential property for sale and rent, commercial property for sale and lease, rural properties and farms, as well as businesses for sale. With a subscriber base of over 1,000 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for August 2011 can be downloaded here (1.0MB pdf document). Additionally the raw data is accessible here as an Excel spreadsheet enabling anyone to analyse the raw data and establish any trends or observations.

Usage rights are governed under attribution to the source of the data being Realestate.co.nz. The next NZ Property Report for September 2011 will be published on this website on Saturday 1st October 2011 at 10am.