The Unconditional Blog

The impartial voice of the industry

 
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Otago – Property Market Pulse factsheet – July 2010

Posted on: July 22nd, 2010 | Filed in Otago Property Market Factsheet

My-Adobe-PDF-Files-iconThe Otago region Property Market factsheet for July 2010 can be downloaded by clicking this icon.

The median property price in Otago fell again in June from $230,000 in May to $227,500. As compared to a year ago prices in the region are up by 3.8%.

Otago region median property price Jul 2010

Property sales fell on a seasonally adjusted basis in June by 6.8% with 182 actual sales in the month. In the first half of 2010 total sales reached 1,237 as compared to 1,419 in the same first 6 months of 2009 – a fall of nearly 13%.

Otago House sales Jul 2010

The inventory of houses on the market fell again in June from the May inventory of 33. The June figure was 29 weeks of equivalent sales. This June inventory of 29 weeks is now approaching the long term average of 26 weeks. This would indicate that the market is now far more balanced than in the past few months with neither buyers nor sellers having the upper hand.

Otago inventory of property for sale Jul 2010

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Queenstown Lakes – Propert Market Pulse factsheet – July 2010

Posted on: July 22nd, 2010 | Filed in Queenstown Lakes Property Market Factsheet

My-Adobe-PDF-Files-iconThe Queenstown Lakes Property Market factsheet for July 2010 can be downloaded by clicking this icon.

Property prices in the Central Otago Lakes district slipped in June from $432,000 in May to $415,000. As compared to a year ago prices in the region are down by 5.4%.

Queenstown lakes district property prices July 2010

Property sales in the region rose significantly in June on a seasonally adjusted basis by 55%. There were 85 properties sold in June up from 67 in May. Despite the rise in June, total sales in the first 6 months of 2010 were down 3.5% with 496 property sales which compares to 514 in the first half of 2009.

Queenstown Lakes property sales Jul 2010

Inventory of houses on the market rose again in June following a dip in May, this despite the rise in sales volumes. In June the inventory level was 113 weeks of equivalent sales as compared to 97 weeks in May. This June level of inventory is still close to the long term average of 91 weeks. This would indicate that the market is fairly well balanced between buyers and sellers.

Queenstown lakes inventory of properties Jul 2010

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Southland – Property Market Pulse factsheet – July 2010

Posted on: July 22nd, 2010 | Filed in Southland Property Market Factsheet

My-Adobe-PDF-Files-iconThe Southland Property Market factsheet for July 2010 can be downloaded by clicking this icon.

The median property price in Southland fell sharply in June, from the may figure of $197,000, to $172,000. As compared to a year ago prices in the region are in the month down over 11%. This takes the current price close to the low of $165,000 in November 2008.

Southland median sales price July 2010

Property sales in the region fell 10% in June on a seasonally adjusted basis to 111 properties. The first half of 2010 has seen a total of 711 sales as compared to 842 in the same period in 2009 – a drop of 16%.

Southland seasonally adjusted sales July 2010

Inventory of houses on the market spiked upwards in June as a result of the sales decline. The June level of 44 weeks of equivalent sales compares to the 40 weeks in May. This June inventory of 44 weeks of equivalent sales remains high as compared to the long term average of 26 weeks. This would indicate that the market is still favouring buyers.

Southland inventory of properties for sale Jul 2010

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Historical mortgage approval data exposes deeper insight

Posted on: July 21st, 2010 | Filed in Buying / Selling a home, Money Matters

A post earlier this month “Mortgage approvals data adds to the stable of valuable property stats” examined the recent trend in mortgage approvals as released by the Reserve Bank matched to recent property sales data from REINZ.

A question posed in a comment on that article asked the question as to the history of mortgage approvals and sales to see if it were possible to see more clearly when extensive refinancing by people looking to take equity out of a property ceased as credit tightening occurred and property price appreciation ceased.

The great benefit of hosting an open communication through Unconditional is being able to listen and respond to questions from readers – this is a great case in point.

The chart below tracks the full history of mortgage approvals as published by the Reserve Bank matched to property sales going back to the beginning of 2004.

Mortgage approvals 2004 2010

The chart I think perfectly demonstrates the history of the NZ property market from the perspective of leveraging the equity in the family home to free up cash for either consumption (cars, holidays, boats etc) or residential investment deposits. Through 2004 right up to the end of 2005 the rate of growth of mortgage approvals grew faster than property sales. The scale on the left and right axis are different, during that period monthly approvals for refinance and new finance grew from just over 25,000 to over 40,000 per month whilst sales were of the order of 8,500 per month.

Through 2006 and 2007, the two measures of property sales and mortgage approvals tracked very closely in trend terms with still a significantly higher number of mortgage approvals.

Strangely the 2008 year saw property sales fall, whilst mortgage approvals remained steady – this was the period when interest rates were dropped successively in late 2008 in response to the global economic crisis. Moving right up to date the last 6 months has for the first time see the level of mortgage approvals drop significantly below the trend of sales, currently with the latest monthly sales of properties around 5,000 per month with mortgage approvals of around 22,000 per month.

Update 22nd July

At the request of Tim Harris, the chart below tracks the data of mortgage approvals and property sales by month as a variance % for each month vs. the same month in the prior year.

Mortgage_approvals_- variance

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Connect – the global conference where technology and real estate “connect”

Posted on: July 17th, 2010 | Filed in Featured, International, Real Estate Industry, Technology, Website searching

San Francisco skylineWhat began as a small gathering of technologists and tech minded real estate people over a decade and a half ago has evolved into the most significant global conference on real estate – not just real estate technology. I make this statement as the reality is that technology is, has been, and will in the future, continue to be the largest change agent of this industry globally.

Connect is hosted by Inman News – the specialist news service for the real estate industry and its charismatic founder and host of the conference Brad Inman.

This year’s San Francisco event (they are hosted twice a year – New York in January) has just wrapped up and for me as a regular attendee the value of the event never fails to deliver.

A key essence of the event is information overload. The feeling that after 3 days you have been exposed to the largest mass of insight and emerging comprehension of where this industry is heading in the future. There are always (I sense deliberately) more sessions and content than one person alone can consume. That means that after these 3 days I have to sit down and re-read the scribbled notes and digest the learning in order to come up with a picture that has emerged from the conference.

There isn’t a single message promoted as the theme of the conference, but there is always, in summing up the conference an emerging train of thought that can best describe the conference. For me this year that came from one of the final speakers on the last day – Matt Gilligan of SimpleGeo, who made the simple statement that “Location is Context”. A simple statement, but in my mind loaded with powerful inference. For over the past 2 years the emerging role of mobile technologies has grown and grown to the situation where at this conference more than any other preceding Connect conference mobile was all anyone talked about. Mobile is all about location and being location aware is in a broader context a radical paradigm shift for almost all businesses, however for real estate location is at its very core. The phrase “Location, Location, Location” is an international phrase as well known as the McDonalds “I’m Loving it” or Nike’s “Just do it”

A show of hands ably demonstrated the view of the attendees (some 2,000 of them) as to ownership of smart phones (>70%) and iPads (c.15% after just 3 months on sale!). This industry, or at least those at the forefront of technology adoption within it, are embracing mobile as a game changer for the industry. The exhibiting companies as well as almost all presenters talked and demonstrated smart phone apps and iPad apps – next year this portfolio will undoubtedly extend to include Andriod and potentially Microsoft Mobile Window 7.

Another interesting stream of content from the conference of specific relevance to Realestate.co.nz was the whole area of search. A couple of excellent panel discussions and workshop looked at search as the online tool of entry to the real estate marketplace. Providing an unbiased and external perspective was Gary Flake of Microsoft who rightly asked the question; could there be a better way of searching for property? after all the facet based search on price, bedrooms, bathrooms and property type is really a crude way of interpreting the characteristics of lifestyle / lifestage. This theme was picked up by a workshop group who having the benefit of a 24 period to debate and discuss the issue came back with some excellent proposals around leveraging the “Social Graph” to apply all that accessible online information tied up collectively in all your personal behaviours, actions and intent online to better present property that really should suit you.

The practical application being that if you were able to share your key social graph around these parameters – salary = price range; family scale = size of house; age = size of house / location; entertainment likes & activity = location / style of house. All of these clues are bound up in your profile & activity on sites such as Facebook / LinkedIn / Amazon / iTunes / Netflix / your bank account. Now clearly this list includes some very non-public data and as such raises some red flags, but just challenge the concept for a moment to say, if this social graph was inputted through an algorithm to the database of available property on the market as well as alerts to new property, it would certainly provide a richer set of results than just searching for 3 bedroom homes under $500,000 in inner city suburbs of Wellington.

The Connect conference is in many ways a reaffirmation of the fact that we live in a wired (& more so these days wireless) and mutli-connected world and the issues and challenges faced in the real estate market in NZ are so similar to the issues in Europe, US, Australia and Asia, further evidenced by attendees from all the major developed countries of the world represented at the conference. This was further evidenced when set against the hi tech apps and online tools profiled at the conference, a presenter talked of the abandonment rate of telephone inquiries which divert to voice mail and from research how low the return call rate was. It left a sobering reinforcement of the fact that technology cannot replace the human process, but hopefully can make the smarter agents more effective and efficient and enable them to track that performance more accurately as an individual or business owner.

Connect is a valuable event. It has grown from being a US domestic event to become an international event – even noted by many at this years conference that Australians seems to be “everywhere”. I personally was delighted to see a good number of NZ representatives eagerly absorbing the content. It is a conference I would highly recommend to anyone with a conviction to invest in their career in real estate and who recognises the game-changing role of technology in that future.

Sydney skyline

Great news could be on the horizon, there was a question asked in the closing session as to other locations for hosting Connect. The question was posed by an American, their question was directed at an alternative US location, but the answer from Brad included the inference that they might look at international locations – Beijing and Sydney were mentioned.

To have a Connect in our Asia Pacific region would be enormous and I will share my passion and support to try and get such a conference organized.

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New appointee directors and independent Chairman for REINZ

Posted on: July 15th, 2010 | Filed in Real Estate Industry, Real Estate Industry News

Rosanne Meo - Briscoe Group AGM - Photo - LIFEThe Real Estate Institute of New Zealand (REINZ) has announced that it has completed the appointment of the new board which will provide future governance for the industry member organisation. Key to these appointments are two independent directors – Dr Richard Janes and Rosanne Meo, who will take on the role of Chairman.

Additionally the 9 person board will comprise two industry representatives with extensive management experience, these being Bryan Thomson (Head of Australasian operation for Harcourts) and David Rankin (Chair of the Real Estate Network in Christchurch. The 5 other directors are all regionally elected representatives Jean Smith, Auckland; Philip Searle, Gisborne; Euon Murrell, Wellington; Paul Hedwig, Nelson; Liz Nidd, Dunedin.

The appointment of these directors completes the final stage of transition of the organisation from being a mandatory legislated body under the former 1976 Real Estate Agents Act to a new independent member representative organisation freed from the legislative requirements with the passing of the 2008 Real Estate Agents Act.

The governance model of REINZ formerly operated through a Council will elected representatives and a National President elected biannually from within the Council. This new structure which operates under a new constitution. With this new board comprising as it does independent directors and industry experts, it will certainly be keen to present the organisation to the industry as a valuable resource to help promote and advocate for the benefit of the industry and its members.

Full disclosure: Realestate.co.nz Ltd of which Unconditional is a part, is 50% owned by REINZ.

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June property sales signal continued weakness

Posted on: July 14th, 2010 | Filed in Buying / Selling a home, Featured, REINZ Monthly data

REINZ monthly article headerJune signals the start of winter and traditionally sees sales volumes fall. In statistical terms June has a seasonality factor of -4.5% indicating that sales should be around 4.5% less than an average month. For 2010 the sales of property across NZ fell short of seasonal factors – well short.

In the month 4,575 properties were sold; down on May and also June last year. These figures are released by the Real Estate Institute (REINZ) from submitted sales data from all licensed real estate offices across the country.

Applying this seasonality factor, June sales were down 3.6% on May at a seasonally adjusted level of 4,790. Tracked on a seasonally adjusted basis over the past 5 years clearly shows not only where the market is, but also where it appears to be heading with clear sections highlighted to show trends.

Seasonally adjusted sales to Jul 2010

To provide insight to the state of the market as judged in volume terms the chart below tracks June sales for each of the past 10 years. The chart not only shows the relative scale of the market but puts 2010 sales only just above the lows of 2008.

REINZ property sales for NZ - June

It now seems clear that the 2009 sales recovery was more a bounce back driven by a weakness of pricing combined with a segment of sellers that were forced to sell, 2010 now seems to signal a significantly quieter level of market activity.

Taking not just a single month but a 6 month period assist in removing monthly anomalies and shows how in the first 6 months of 2010 total property sales have totaled just less than 30,000. At 29,844 these first 6 months of 2010 are lower than the first 6 months of 2008 which were only slightly higher at 29,870.

REINZ 6 month sales of NZ property 2000 to 2010

As the chart above shows this level of first half year sales places volume at the lowest level since records began with REINZ back in 1993.

Whilst there is no denying the significant change that has occurred to the consumer attitude to debt allied to property investment and borrowing in general over the past 2 years as a result of the global credit crisis and Great Recession, the impact on property sales seems to be more pronounced than would have been expected by this factor alone. There is strong evidence now borne out by these sales figures that a sector of the property market is either sitting on the sidelines or taking a significant period of time out – this sector being property investors. For looking back their influence on the market in the period of 2002 to 2007 is unmistakable.

However what is interesting in analysing property sales figures is to stack them up against the number of dwellings in NZ to look to what extent the frequency of property turnover has changed over the years. Taking the census data for the number of dwelling as the base in each of the past 18 years and applying the moving average total of property sales presents the following chart with the measure of the % of all dwellings transacted each year.

Property sales of dwellings Jul 2010

The last couple of years not only show significant lows as compared to the peak years of 2002 to 2007 but also measured against the more “normal years” of the 1990’s. The current level at 4.2% of all dwellings transacted per year compares to the long term average of 6.3%.

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Mortgage approvals data adds to the stable of valuable property stats

Posted on: July 13th, 2010 | Filed in Buying / Selling a home, Featured, Money Matters

Calculating financial dataAn overriding principle of this website of Unconditional as a complement to the listings website of Realestate.co.nz, is to provide timely and informative insight into the state of the property market, and with it the key statistics that can assist in better understanding the market.

We provide through the statistics from the realestate.co.nz website the NZ Property Report which looks into the supply and inventory of the marketplace – how many new properties are coming onto the market and how much stock of unsold houses are on the market.

To this we also analyse the monthly sales statistics from REINZ as well as the stratified house price index.

It is very clear from the latter statistics, especially volume sales that the NZ property market is either (dependent upon your perspective) in a depressive trough or operating in a new normal.

The chart below summarises the NZ Property market across the best part of two decades. The red line indicating the moving annual total of property sales (right hand axis) with the blue line indicating the value of those transactions (left hand axis).

NZ Property sales moving annual total 1993 to 2010 Realestate.co.nz

The latest data to May 2010 shows that in that preceding 12 months 66,769 properties were sold, whilst this is up from the low point of the year to February 2009, when a total of just 53,520 properties were sold, there has been a noticeable recent decline which followed a period of improving sales coming out of that bottoming of sales. Preceding that was the nearly two year decline in sales which took annual sales from 106,243 in the year to April 2007 to the low point in February 2009.

As ever making objective assessments of the future direction of the market is not an exact science and is why many respected economists and academics are reluctant to make such estimates preferring to let the current direction of trends from a variety of sources help point the way; one such set of data being discussed recently has been mortgage approvals.

Mortgage approvals are statistics released by the Reserve Bank, and are collected from a survey of 7 registered banks and provide statistics of the weekly volume and value of new credit lent for the purchase of property. The chart below tracks such data in terms of the weekly number of mortgage approvals on a 4 week moving average for each of the past 3 years.

NZ Mortgage approvals 2008 to 2010 Realestate.co.nz

Very clearly new mortgage approvals are running considerably lower than the prior 2 years. Whilst the fact that they are low would not come as a surprise, what is somewhat surprising is the fact that they should in theory mirror the volume sales of property over the same period. Tracking monthly property sales over the past 3 years on a similar chart as shown below does not produce that mirror image.

NZ Property sales 2008 2009 2010 Realestate.co.nz

This would seem to indicate that mortgage approvals are not exactly correlated to property sales. Reading the inclusions and exclusions of the data from the Reserve Bank does help to provide an explanation.

The mortgage approval statistics include both refinance to another bank as well as where the liability holder changes as in the case of sales to family trusts.

Whilst the specific details are not available it would seem to indicate that the property market is being typified by far less refinance switching between banks and potentially less trust transfers as home owners as borrowers seek to manage their current mortgage, without hunting around for refinance deals. This would be especially true as switching banks for refinance could open up issues such as debt to equity ratios when the property value may have fallen in recent years.

Another factor behind the lower mortgage approvals rate to property sales rate could well be the first signs of “Baby Boomers” selling down properties for which a new property could be funded mortgage free.

As ever richer information in the form of property statistics can be helpful to make better informed decisions in the market, and thereby ensure clarity and comprehension.

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We have a vacancy for an Accountant!

Posted on: July 9th, 2010 | Filed in Website news

Accounting calculatorRealestate.co.nz continues to grow and develop; providing as it does a comprehensive service to the real estate industry. Just 4 years ago we launched the website at a time when online real estate was really beginning to take off. Back then just over half of all property searching was done online, today that number is closing in on 100%. The number of daily visitors to our site regularly exceeds 25,000.

The organisation of Realestate.co.nz has grown in size to match the growing needs of real estate agents who more and more look to online marketing to provide clients’ with effective exposure to attract buyers, tenants and investors.

We started out 4 years ago with a a small handful of people to manage this business and its 1,200 customers. Today that team has reached double figures and we are ambitious as to our future.

As pat of this growth we are looking to bring on board a full time Accountant to join the team.

The role is very much hands-on and covers all aspects of of accounts and financial systems which are fully integrated with our website and customer management system. We don’t have a finance department so this role has to manage every aspect of finance from strategic to nuts and bolts – invoices, banking and debtors!

We have a great company culture with a great working environment in our open plan offices in Parnell. This new addition to the team would feel right at home if they like to be in the “mix of it all” with a fun and dynamic young team.

Up until now we have had our accounting and financial services provided for us by a 3rd party company, whereas we now feel the time is right to bring this into being a part of the team, working closely with sales, customer support and the CEO.

If this feel like a role that would interest your or someone you know then contact our partner financial services company Staples Rodway who are handling this recruitment – the application process starts naturally online – do you think we would advertise this role in the newspaper!

Just go to the job advert on Jobs.co.nz (a great Wellington based kiwi start up challenging the incumbents) and apply – we would love to meet you.

Alistair Helm

CEO – Realestate.co.nz

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Mortgagee sales still show the drawn out effects of “The Great Recession”

Posted on: July 5th, 2010 | Filed in Buying / Selling a home, Featured

iStock_000007731653XSmallRecent statistics would certainly point the way to an improving ecomomy with the March quarter recording a 0.6% growth following a 0.9% growth, however the sober reality as Bernard Hickey describes it, is, in his judgment a Clayton’s Recovery – the recovery you’re having when you are not having a economic recovery. The reality is that for people caught with a large debt burden then this “recovery” is not feeling too good and the latest data for mortgagee sales certainly supports this view.

Over the first 4 months of 2010 a total of 765 properties have been sold as mortgagee sales – where the owner has defaulted on the terms of the lending agreement and the lender as the mortgagor has sort to recover as much as the debt as possible through a mortgagee sale. This total of 765 compares to 726 for the same period in 2009 and 246 in the first 4 months of 2008 before the Great Recession began.

Whilst the scale of mortgagee sales show little signs of abating the rate of growth seen over the past few years appears to be slowing and the outlook should be brighter in the medium term. A key indicator of the future scale of mortgagee sales is the inventory of mortgagee properties featured on Realestate.co.nz. The chart below tracks the weekly total from 2007 to the present day. Currently there are 279 mortgagee properties comprising homes, units, apartments and townhouses as well as lifestyle properties.

Realestate.co.nz mortgagee listings 2007 to 2010

The chart certainly highlights that the peak of the market for new listings of mortgagee properties was back in 2008 & 2009, the calmer days of 2007 are still a long way off.

Another key indicator of the mortgagee market is the degree of searching on the web for mortgagee properties as an indicator of demand from investors or general buyers looking to capitalise on stress in the market to negotiate for a property. The website of Realestate.co.nz tracks all keywords used on the site – some 500+ every week with over 8,000 weekly specific keyword searches. Amongst the most actively searched over the past couple of years have been the phrases around mortgagee property – mortgagee sale, mortgagee auction, mortgagee. The chart below tracks these weekly searches and matches the volume to the weekly inventory of mortgagee property on the market.

Realestate.co.nz mortgagee searches and listings

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