The fall in the asking price expectation of new listings coming onto the market in May (from $422,520 in April to $407,349 in May) would seem to indicate that the state of the market is driving a behaviour amongst new sellers to price property to meet-the-market. That is to say in this case given the high levels of inventory of unsold homes matched to sluggish property sales, something has to give and price is what has been adjusted. The sales figure for April from REINZ was 5,207 as compared to April 2009 at 6,210. This means that to achieve a secure sale in today’s market requires sellers to price at a competitive level relative to other similar properties on the market.
These statistics are detailed in the latest NZ Property Report for May 2010, published here and available as a downloadable report to print or distribute.
It is worth highlighting at this point that there is no evidence within the daily data of new listings coming onto the market that the asking price has been affected by any move as a result of the budget of May 20th. In fact new listings slowed considerably in the last week of the month and the truncated mean asking price of those listings was not significantly different from earlier in the month.
This report for May has a revised set of data for inventory. Following feedback from economists, the inventory data which is derived from the stock of unsold houses divided by the 3 month moving average sales figures from the Real Estate Institute has been adjusted to now reflect seasonally adjusted sales. This will ensure that inventory as measured in equivalent weeks-of-sales is now itself seasonally adjusted to better track the level of unsold homes on the market. All historical data in this report has been recalculated to reflect this change.
Asking Price
Property price expectations of new listings coming onto the market fell by 4% in the month of May as compared to April. Asking price has been volatile over the past 6 months which has also typified a quieter period of sales in the market; however since early 2009 asking price expectation has been trending upward.
As compared to May 2009 the price was up marginally by 1.5%, however the truncated mean price is still some 5% below the peak of the market back in October 2007.
New Listings
The volume of new listings coming onto the market fell again in May to 11,733 – down 4% from April, however the figure is up 17% as compared to the same period last year.
Whilst the month-on-month decline is consistent across the regions; underlying the national figures is a higher increase (year on year) in new listings in the 3 key metro markets.
Inventory
The level of unsold houses on the market at the end of May totaled 51,980.This represented the equivalent of 46.9 weeks, as assessed on a seasonally adjusted basis.
The inventory of unsold homes had been rising steadily over the past 11 months, however for the first time the trend has halted. A key contributor to this has been the slowing in the pace of new listings coming onto the market, especially as property sales still remain sluggish.
Regional Summary – Asking Price Expectations
After a 3 month period through the summer and autumn when asking prices remained stubbornly fixed at the c.$420,000 level whilst inventory crept up and sales remained sluggish; the asking price has fallen by a significant level in May.
Of the 19 regions, 7 did show asking price increases, although these were outside the 3 main centres of which Auckland set the mood with a 2.5% fall in asking price as compared to the recent 3 month period. The increases of price in Wairarapa and West Coast should be taken cautiously as they are two of the smaller regions in terms of volumes of new listings. The significant falls in the regions of Northland, Coromandel and Nelson could reflect the seasonal changes with holiday accommodation changes at the end of summer, and in fact are reflective of similar falls this time last year.
Regional Summary – New Listings
Across the 19 regions of the country, listings showed significant increases in 7 areas with a further 4 posting double digit year-on-year growth. The main metro centres of Auckland, Wellington and Canterbury all showed significant year-on-year increase. This is many ways more of a refection that a year ago the market was showing a resurgence as existing stock was being snapped up by bargain hunters, as falling prices had stimulated the market. This year no such activity has been seen.
There were some significant falls in new listings coming onto the market across the regions, mainly in provincial areas where certainly property sales have been more sluggish and where sellers may have been reluctant to enter the market.
Regional Summary – Inventory
The prevailing sentiment from the level of inventory of unsold houses remains clearly in the camp of property buyers having the upper hand in the market. Of the 19 regions just 3 showed any balance in the market, with only the Central Otago Lakes posting an inventory level lower than the long term average, indicating a slight shift to sellers being in the box seat in this region.
The data for May as with all data for inventory as noted previously has been adjusted to reflect seasonally adjusted sales which has removed some of the volatility extremes of inventory, and better represented true inventory.
Despite the clear view that the property market is currently firmly in the camp of a buyers markets as it has been for a number of months; there are regions of the country which with prevailing conditions remaining, will likely see a shift out of their market focus in the coming months. Of those regions the main ones will be Wellington and Taranaki, which are close to being a more balanced market with neither sellers nor buyers having the upper hand.
Lifestyle Property
A total of 1,146 new listings of lifestyle properties came onto the market in May. This is the fourth month with listings in excess of 1,100, all of which have represented strong year-on-year growth in listings.
The truncated mean asking price has though over the same period fallen significantly from a peak of $601,000 in January to the May figure of $504,557. This figure for May represents a 13% fall comparing the month to May 2009 and a 9% fall as compared to the recent 3 month average.
Within the total, the Auckland region featured strongly with 345 new listings up 64% on May 2009 with an asking price expectation exactly in line with the prior 3 months and prior year at $871,091.
Apartments
The number of new apartments fell again with just 560 coming onto the market in May. This however represents an 18% year-on-year increase, taking the levels back to 2008 market levels.
The truncated mean asking price was down 4% on the prior 3 months at $377,893 and down 5% as compared to May 2009.
As ever the Auckland market dominates the figures with a total of 367 new apartment listings coming onto the market, up 20% on May last year with an asking price expectation of $344,541 down 5% on prior 3 months and down 2% compared to last year.
Property Price Index
Comparing absolute house price sale data to listing price expectation is not a like-for-like comparison, however the alignment of trends can be useful as detailed 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 94% 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 1,160 licensed real estate offices across NZ, representing more than 94% 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 11,733 new listings in the month of May, a total of 405 listings have been excluded due to anomalies. The categorisation of Lifestyle property is defined by the land area of the 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 of the real estate industry of New Zealand, it is an industry owned website providing online marketing services to the real estate industry. The shareholders in the website comprise the REINZ (50%) and six of the largest real estate companies (50%). The website is the most comprehensive website for real estate in NZ, currently hosting over 120,000 listings, covering 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 1,160 offices, the website features over 94% of all listings from licensed real estate agents in NZ. Realestate.co.nz was visited by over 401,000 unique browsers in the month of April from both domestic and international visitors. The website is the most popular website for international visitors enquiring of NZ real estate, with over 124,000 unique browsers in the month of April from more than 200 countries.
The full NZ Property Report for May 2010 can be downloaded here (1.4MB 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 June 2010 will be published on this website on Thursday 1st July 2010 at 10am.
[...] [...]
An off topic question.
Should an agent disclose to prospective buyers prior to an auction if a house has an external absbestos roof, or is this up to the buyer as part of exercising due diligence?
Andrew,
I am certainly not qualified to answer this one, but will encourage some contribution from within the industry circle
Hi Andrew,
I’m an agent, not a lawyer, but he’s my take:
Under the new law introduced last year the agent must disclose anything that would materially affect a buyers decision. I’m not sure on the exact interpretation as this applies to auctions, but my gut instinct would say that they should include it in the auction documentation. If I was the agent on a property that had an asbestos roof I would be telling all potential buyers, as I personally feel they should know. I would assume that the law would probably follow that line as well.
For example, when we do tenders we include any disclosures about the property on the tender documents so the buyers know exactly where they stand.
Hope that helps.
Does the agent know that it is an asbestos roof?
Has the owner made any disclosures in that regard?
If the agent knows then they should disclose.
From an agents point of view, it is safer to disclose any such negative features of the house to save issues down the track.
ON the other hand, as an agent, you have to be careful not to make statements about things you are making a guess on, otherwise you may get into trouble with the seller. You have to be careful about saying that the roof is asbestos if you have no proof that it is. A hunch is not a fact!
[...] more details read or download the full report on the unconditional website. Share this [...]
Thanks for the feedback
The Real Estate Agents Authority website has a Code of Conduct link – see http://tinyurl.com/ycslcld
Here is a relevant section fom that Code of Conduct:
6.5 A licensee is not required to discover hidden or underlying defects
in land but must disclose known defects to a customer. Further, where
it appears likely, on the basis of the licensee’s knowledge and experience
of the real estate market, that land may be subject to hidden or
underlying defects, the licensee must either–
(a) obtain confirmation from the client that the land in question is not
subject to defect; or
(b) ensure that a customer is informed of any significant potential risk so
that the customer can seek expert advice if the customer so chooses.
Hello,
I am viewing the NZ market from overseas. What does this tell us about actual numbers of properties changing hands (at whatever price). I understand it is a buyer’s market, but at some level, the inventory clears. Are the agents in a good or bad position now? (I suspect they are struggling, are there too many agents in NZ? Low barriers to entry?) Are they selling more homes at lower prices? Or simply not selling. What % commission on average would an agent take come if he were working for a national branded agency. Thank you.
Ben,
Thanks for your interest and questions, which I will try to answer as best I can.
1. The latest sales data is presented by the Real Estate Institute (REINZ) for May. The most recent article written as a summary of the market was for April.
2. Certainly at some point the high levels of inventory will clear – potentially down from the present level of around 48 weeks to closer to 30 weeks – the key is buyer confidence and price levels that buyer think is good value – that is what ultimately the market has to decide. Certainly the early indication of a weakening of asking price may be an early indication of this.
3. That is a big question – are agents struggling? – agents are eager to complete deals – this is how they earn a living based on the commissioned based structure of the industry. It is important to realise that the market is still very much active. Around 200 homes are sold every day.
4. As to what an agent earns – well that is what agents agree with the licensee who they work for as to the split of the commission that is charged to the seller. I am not an agent and would rather leave that question to an agent who will no doubt add to this discussion to share their experience.
Thank you for your response. Very helpful.