The Unconditional Blog

With the Chinese currency set to rise NZ property could be an attractive investment

Posted on: July 3rd, 2010 | Filed in Featured, International

The Chinese currency (Yuan) is predicted to rise in the coming months following the decision in early June to remove the pegging of the currency to the US dollar. The strategy adopted over years ago was designed to stimulate exports by effectively depressing the value of the currency.

Now that the Yuan will become more of a floating currency its appreciation as a function of projected economic growth will improve the overseas purchasing power of Chinese nationals looking for investment options. The domestic property market in China has gone through a boom and this is predicted to drive smart investors to seek overseas options. This could result in more Chinese buyers for NZ property.

Fact / Hypothesis / Wishful thinking? – only time will tell. However it is very interesting to use the power of the property website of realestate.co.nz to examine overseas traffic particularly from mainland China and Hong Kong.

The rich data of a website is perfect as a source to analyse just such a hypothesis – using the IP address analysis it is possible to detail exactly what proportion of all traffic to the site comes from which country and what they look at on the site.

Analysising this data over the past 18 months shows a striking fact – that as the currency exchange rate between the NZ dollar and the Chinese Yuan has risen and fallen so the level of viewings by Chinese and Hong Kong based computers has followed an identical path. This pattern is unique to these markets as the metric is not absolute traffic, but percentage of all traffic. The chart below shows this very clearly.

The red line with the right hand axis measures the value of the purchasing power in NZ dollars of the Yuan, whilst the blue line with the left hand axis tracks the percentage of all visitors to the website each month from mainland China and Hong Kong combined.

As to what this audience is looking at – the answer simply and in some ways not unexpectedly is apartments. The chart below tracks the traffic to just apartments on the realestate.co.nz over the same 18 month period compared to traffic to all listings on the website, on the same scale axis.

The chart shows the percentage of all visitors looking at apartments viewing from mainland China and Hong Kong as the red line which is signifcantly above the same measure for percentage of all visitors looking at all listings on the website as the blue line. Also of note is the significant rise in apartment viewing since late 2009. At the peak in late 208, over 2% of all visitors viewing apartment listings on the site were from China and Hong Kong and the current level of interest is certainly heading that way again.

NZ Property Report – June 2010

Posted on: July 1st, 2010 | Filed in Featured, NZ Property Report

The June 2010 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 June. 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.

The summary view of the report for June 2010 is that the market continues to witness a confidence amongst sellers, who are keen to market their properties, and who despite the relative stock of property on the market signal at this stage no further easing of asking price expectation.

A full print version of the NZ Property Report – June 2010 is published below and is available for download (1.4MB) and distribution.

Summary of the market – June 2010

The property market continues to attract sellers, witnessed by the relatively strong level of new listings with 11,106 coming onto the market in June. This level is up 16% on the same month last year. At that time in June 2009 the market was experiencing a listings’ shortage as well-financed buyers where negotiating hard with sellers keen to offload their property as property prices had fallen through late 2008 and early 2009, and uncertainty surrounded the future direction of pricing in a market so accustomed to property price appreciation. This situation is best seen from the perspective of inventory levels – 35 weeks of equivalent sales volume on the market a year ago compared to 45 weeks today.

The asking price expectation has moved little in the past month following the more significant drop between April and May. At the time this was judged to be a pragmatic reaction by sellers eager to “meet the market” in price terms and seek to attract what continues to be a weak level of buyer activity. The truncated mean asking price for June at $410,058 would seem to indicate a staunch position taken by sellers as the revised level they judge to be the “market”, not requiring further adjustments down in price at this time.

As briefly commented upon in last month’s report the budget announcement in mid May regarding property investment had the potential to impact the supply side of the market in terms of new listings in June and July. Whilst the level of new listings in June was up on a seasonally adjusted basis, the asking price expectation change would not be seen as reflective of the impact of rental properties coming onto the market, as this would likely be seen to drag down the truncated mean price whereas the case was that the asking price level edged up in June.

Asking Price

Asking price expectations of new listings coming onto the market rose very slightly in June following the fall in May. This would seem to indicate that sellers recognise the need to price according to the market conditions which show little signs of appreciation.

As compared to a year ago the May 2009 the price was up marginally by 1.7%, however the truncated mean price for the month of June is still 4.4% below the peak of the market back in October 2007.

New Listings

The volume of new listings coming onto the market fell again in June to 11,106 – down 5% from May, however when the expected winter slow down is factored in with a seasonally adjusted factor the true state of the new listings market shows a 5% increase.

Over the 12 months to June 2010 a total of 145,920 new listings came onto the market. This was up 8% on the same 12 months to June 2009.

Inventory

The level of unsold houses on the market at the end of June totaled 51,916 barely changed from the May total. This represented the equivalent of 45.3 weeks, as assessed on a seasonally adjusted basis.

The inventory levels are beginning to fall having risen to their peak in April at 51.6 weeks of equivalent sales.

Regional Summary – Asking Price Expectations

The asking price expectation of sellers in June reflected the current state of the market with only a marginal change following the fall in May.

Across the country the main view is that asking price expectation is coming under pressure with 11 of the 19 regions reporting asking prices which are below the recent 3 month average. The main metropolitan regions of Auckland, Wellington and Canterbury all showed an easing of asking price. There was a notable and significant increase in asking price in the Queenstown Lakes region from $523,760 to $642,710 coupled with a 29% increase in new listings.

Regional Summary – New Listings

As the regional map shows the overall sentiment of the market remains in the territory of a buyer’s market, a full 15 of the 19 regions are showing a year-on-year increase in new listings, with 10 regions posting increases of over 20%.

The larger regions of Auckland, Canterbury, Waikato and the Bay of Plenty all showed year- on-year increases of 10% or less, although the Wellington region bucked the trend with a 29% year-on-year increase in new listings.

Dividing the country up into metropolitan and provincial areas, the metro areas (3 key centers) are experiencing a lower rate of increase in new listings (+12%) as compared to provincial areas (+21%).

Regional Summary – Inventory

The picture of the regional property market is showing signs of changing. For most of the year- to-date the view of the market has been very clearly skewed to a strong buyers market. However as the chart shows there are some easing in the relative levels of inventory around the country.

The chart represents the actual inventory of unsold houses (measured in terms of equivalent number of weeks of sales) by region matched to the long term average (LTA) inventory level. An inventory level significantly higher than the LTA indicates a buyer’s market, with a figure significantly lower indicating a sellers market.

Whilst the predominant sentiment across the country is still to it being a buyer’s market; at this time 6 of the 19 regions are this month moving towards a more balanced market, with the Nelson region clearly bucking the trend with a bias to a seller’s market with inventory below the LTA, sales activity strong and asking price expectation steady.

Lifestyle Property

The steady flow of new listings of lifestyle properties appears to have stalled in June. Having seen 4 straight months with a similar level of c.1,100 listings the new volume of listings in June dropped by 18% to 945. A key contributor to this decline was the Auckland region where a 44% month-on-month decline was seen with just 195 lifestyle listings in the month. Matched to this was Canterbury region with a 32% decline from 147 to 100.

The asking price expectation of these listings though remains strong with an increase (month-on-month) of 14% to $573,893, however the sector does experience variance in asking price due to the sample set and diversity of properties.

Apartments

The number of new apartments coming onto the market in June remained pretty much in line with May with a total of 562 in the month. This represented an 18% year-on-year growth. Looking at the long term trend, the last 12 months has seen a 24% increase as compared to the prior period with the Auckland region as the largest market recording a 26% increase on a 12 month moving average basis.

The truncated mean asking price for the month was $367,216 which was down 5% on the most recent 3 month average and down 15% as compared to June last year. The Auckland region showed an asking price expectation of $331,958, down 6% on the recent 3 month average and 11% down on June 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 11,106 new listings in the month of June, a total of 160 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 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 350,000 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 over 5,000 listings for all types of farms and agricultural land as well as over 11,o00 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 26,000 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 4,000 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 1.5m 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 120,000 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 1,160 offices, the company represents over 94% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for June 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 July 2010 will be published on this website on Sunday 1st August 2010 at 10am.

NZ Property Market Pulse – June 2010

Posted on: June 24th, 2010 | Filed in Featured, Property Pulse - Regional Market Report, Regional News

Assessing the state of the property market can be as daunting as finding that perfect house. There is a multiplicity of reports appearing all the time, all sharing insight into where the market is headed. We would like to provide on a monthly basis – not a new report, but a digest of what we here at Realestate.co.nz are the key numbers to follow.

The property market is like any other type of market, there are buyers and sellers, there is available stock and there are sales number and also the ever critical sale price. These are the key numbers we think are critical to follow. Each month we will highlight by region and nationally these key numbers and the picture they are showing.

Property Sales

The number of property sales is a key measure of buyer activity. The Real Estate Institute release this data on a monthly basis from the sales made by all licensed agents in the prior month making this data the most timely and comprehensive. Actual monthly sales data is effected by seasonal factors, for this reason seasonally adjusted data is presented which clearly shows one month to the next if the sales are going up or down.

Commentary:

Sales in May amounted to 5,206 down just a single house as compared to April. As viewed on a seasonally adjusted basis the number of sales turned around having seen a consistent growth from the start of the year, reasons behind this could certainly be influenced around uncertainty surrounding the May budget and future interest rate expectation.

Property Price

The selling price of properties measures that critical balance between what a buyer is prepared to pay and what a seller is prepared to accept. The Real Estate Institute data of prior month sales produces a median price. This raw number is then re-calculated through a model developed in partnership with the Reserve Bank of NZ to create a Stratified Price, which ensures that volume changes in key price segments do not skew the figures.

Commentary:

The stratified price fell in May down from the April figure of $366,925 to the May figure of $361,600 taking prices back to the same level at the start of the year. This clearly shows the market is tight with little immediate pressure on price as sales volumes remain subdued.

Stock of Property

The number of properties on the month is provided from Realestate.co.nz data and measures the level of seller activity in the market. The data represents the total number of new listings coming onto the market each month and is compiled at the start of each month for the prior month and is published in the NZ Property Report. The measure of properties on the market is represented by the number of weeks of equivalent sales, and judged on a comparative basis with prior months more accurately reflects the state of the market.

Commentary:

The level of new listings in May fell, sending the stock of property on the market down from the peak of 52 weeks in April – that was equating to a full years worth of sales on the market. The current level for May at 47 weeks is still high by historical standards. The long term average is around 38 weeks which would indicate that the market is still very much in favour of buyers rather than sellers.

These statistics are the aggregation of all the statistics from across the country. As is well know by those in the industry, real estate is a local business and in an attempt to provide greater insight into the local market the same set of key data – sales, selling price and inventory has been calculated for each of the 19 regions of the country. Check out the factsheet for your local region to see what is happening in your neck of the woods.

North Island

South Island

Northland – Property market pulse factsheet – June 2010

Posted on: June 24th, 2010 | Filed in Northland Property Market Factsheet

Property prices edged up slightly in May to $325,000 an increase of 6% over the past year.

Sales fell in May on a seasonally adjusted basis from 156 in April to 124 in May. The first 5 months of this year has seen volumes down 6% over the same 5 months of 2009.

Inventory of houses on the market fell in May from the all time peak of 171 weeks of sale to 154, this continues to be well ahead of the long term average in the region of 110 weeks.

In overall terms the property market in the Northland region continues to reflect a buyer’s market, however pricing is as yet is not showing any signs of relenting to the pressure of buyer negotiations.

The Northland region – Property market pulse factsheet for June 2010 is available as a download pdf document.

Auckland – Property market pulse factsheet – June 2010

Posted on: June 24th, 2010 | Filed in Auckland Property Market Factsheet

Property prices based on the stratified pricing model remained stable in May at $481,225 – this level has been consistent around the $480,000 mark for most of this year. Compared to 2009 prices are up 3.7%.

Property sales remained flat on a seasonally adjusted basis with 1,664 in May as compared to 1,665 in April. Sales for the first 5 months of 2010 reflect a 5% lower level than the same period on 2009.

Inventory of houses on the market fell slightly in May from the April peak of 41 weeks of sale to 38 weeks, this continues to be slightly ahead of the long term average in the region of 32 weeks.

In overall terms the property market across Auckland continues to be steady, certainly a more robust level of activity compared to other regions of the country.

The Auckland region – Property market pulse factsheet for June 2010 is available as a download pdf document.

Coromandel – Property market pulse factsheet – June 2010

Posted on: June 24th, 2010 | Filed in Coromandel Property Market Factsheet, Uncategorized

Property sales in the Coromandel slipped from 54 to 48 sales on a seasonally adjusted basis. However sales for the past 3 months have been at an encouraging level up 16% at 153.

Inventory of houses on the market remained steady at 185 weeks of sales from 187 in April. This level of inventory is consistent with the long term average of 172 weeks. This would indicate that the market is fairly well balanced between buyers and sellers.

Property prices for the Coromandel are included in the broad Auckland regional median property price, in May this price was $455,000 up 1.1% on May 2009 price.

In overall terms the property market across Coromandel remains fairly active.

The Coromandel region – Property market pulse factsheet for June 2010 is available as a download pdf document.

Waikato – Property market pulse factsheet – June 2010

Posted on: June 24th, 2010 | Filed in Waikato Property Market Factsheet

Property sales in the Wiakato fell from 320 in April to 265 in May as measured on a seasonally adjusted basis. The current level of sales is considerably slower than the same period last year. The 3 months of March / April / May is showing a 16% year on year fall.

Inventory of houses on the market fell in May from the peak of 61 in April. The May inventory of 55 weeks of equivalent sales remains high relative to the long term average of 45 weeks. This would indicate that the market still holds a slight advantage for buyers.

Property prices for the Waikato are included in the broad Wiakato / Bay of Plenty regional median property price, in May this price was $307,000 which was down 1.6% on May 2009 price.

The Waikato region – Property market pulse factsheet for June 2010 is available as a download pdf document.

Bay of Plenty – Property market pulse factsheet – June 2010

Posted on: June 24th, 2010 | Filed in Bay of Plenty Property Market Factsheet

Property sales in the Bay of Plenty remained steady with 298 sales in May as measured on a seasonally adjusted basis. The first 5 months of 2010 have however seen a 10% lower level of sales as compared to the same 5 months in 2009.

Inventory of houses on the market fell in May from the peak of 75 in April. The May inventory of 67 weeks of equivalent sales remains high relative to the long term average of 55 weeks. This would indicate that the market still holds a slight advantage for buyers.

Property prices for the Bay of Plenty are included in the broad Wiakato / Bay of Plenty regional median property price, in May this price was $307,000 which was down 1.6% on May 2009 price.

The Bay of Plenty – Property market pulse factsheet for June 2010 is available as a download pdf document.

Central North Island – Property market pulse factsheet – June 2010

Posted on: June 24th, 2010 | Filed in Central North Island Property Market Factsheet

Property sales across the Central North Island remained steady in May on a seasonally adjusted basis, with 49 in the month as compare to 52 in April. The first 5 months of the year however show an 11% year-on-year decline in sales.

Inventory of houses on the market fell again in May. The peak of 122 weeks of equivalent sales in March has fallen through 101 in April and 96 in May. The May inventory though is still considerably higher than the long term average of 74 weeks. This would indicate that the market is still very much favouring buyers.

Property prices for the Central North Island are included in the broad Waikato / Bay of Plenty regional median property price, in May this price was $307,000 which was down 1.6% on May 2009 price.

The Central North Island – Property market pulse factsheet for June 2010 is available as a download pdf document.

Gisborne – Property market pulse factsheet – June 2010

Posted on: June 24th, 2010 | Filed in Gisborne Property Market Factsheet

Property sales in Gisborne fell for the 3rd straight month on a seasonally adjusted basis with 29 in May, as compared to 32 in April and 42 in March. This past 3 month period shows a significant 28% year-on-year decline in sales.

Inventory of houses on the market fell in May from the peak of 53 in April. The May inventory of 47 weeks of equivalent sales is edging closer to the long term average of 43 weeks. This would indicate that the market is close to being a balance between buyers and sellers.

Property prices for the Gisborne are included in the broad Wiakato / Bay of Plenty regional median property price, in May this price was $307,000 which was down 1.6% on May 2009 price.

The Gisborne region Property market pulse factsheet for June 2010 is available as a download pdf document

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