If ever you need to access to the definitive set of graphs on real estate and property statistics for NZ – then this is the place for you (and for me!). The team at interest.co.nz maintain this set of 21 graphs which pictorally provide a great snapshot of the drivers of property sales in NZ.
Not only just real estate statistics are provided on the website – here are the other categories comprehensively covered:
With the level of property sales already down 44% at just 25,500 properties in the first 5 months of the year – and stock of property on the market at record levels, it comes as no surprise that the level of rental properties on the market is also growing.
In fact over the past 3 months as the levels of new properties coming onto the market has begun to decline and the overall stock of properties has also begun to decline, so the level of stock of rental properties has risen. The graph below shows the statistics of properties listings on realestate.co.nz through the first half of 2008.
The blue shaded area represents the stock of rental properties – growing sharply from a steady 4,000 in the first 3 months to then spike up to the current level of over 6,000 this month. At the same time the red columns representing properties for sale as measured on the left hand axis shows the decline from April, down from 61,700 to just under 60,000 this month – not a massive decline, but a decline all the same.
As a note it is important to note that rental properties on this website tend to reflect a high turnover as the timeline of renting is on average so much shorter than selling properties, however looking back over the past 24 months – no other period has seen such a fluctation in stock.
Additionally it is clear that it is difficult to directly correlate the circumstance of properties once marketed for sale being alternatively offered for rental, however the feedback from within the industry and other articles definitely point in this direction.
Ammended content 9th July
At the request of Lance – below is the same data presented for an 18 month period – clearly the stock of rental listings are growing at a rate far ahead of any seasonal influence.
The reliance on newspapers by the real estate industry has been an enduring relationship – one that has seen many a boom and bust in the latter’s industry cycles, and yet through all of that, the two have been inseparable – a perfect symbiotic relationship.
Newspapers have delivered the captive audience and offered the visual medium so critical in portraying property for sale at what has been a cost effective rate. The real estate industry has found the layout opportunity of the newspapers very much to their liking with clear sections focussed to bundle key company brands rather than location based presentation. Allied to this the individual agents have grabbed the opportunity to profile themselves as part of the newspaper advert for a client’s property again bundling their portfolio as a subset of the company pages. All very efficiently handled and mutually supportive.
But as with every other industry and in fact every advertising medium the steady march of the internet has begun to expose some deep cracks in these relationships.
The newspaper industry when it comes to real estate search is struggling to maintain a relevant and credible offering – the market research from Nielsen Online as of July last year showed that in the 12 months running up to the report the rating of newspapers as the most actively used medium for searching for properties in the past week had remained static at just under 50% of all buyers, whilst by comparison the web has rocketed from 70% to 80%. (The latest update to the research will be available shortly and based on overseas trends is rising at a stellar rate towards 95%).
The impact from the latest data from the US is also showing the effect on the bottom line of the newspaper industry. The statistics from the Newspaper Association of America just released for the 1st quarter of 2008 show just how much the real estate industry is fleeing this once critical medium – a 35% decline in spending in the 1st quarter of this year as compared to 2007 – just US$619m was spent – representing a net loss to the newspaper industry of US$334m!
It is interesting that these figures were reported in the NZ Herald the other week, but were not featured among the headlines of the day. The adjacent graph shows the extent of the decline in real estate advertising on newspapers in the US over the past 3 years – a period that has seen over a billion dollars removed from newspapers’ coffers and reinvested in other media or simply not spent.
The comparable data for NZ is not published – investigation of the website for newspaper advertising does not offer such comprehensive information to provide an insight into the performance of the two major media empires of the NZ market.
Whilst the decline is inevitable the extent of the reliance on this medium is still surprising. One explanation for the continuation of the support for the medium was effectively shown in a recent research study of the marketing activities of a sample of 1,300 US agents carried out by VHT – a real estate marketing services company.
When asked what their most common media for advertising a listing 83.3 percent said they used newspapers. While respondents indicated a significant portion of their listing budget was spent on newspapers, only 20.4 percent said they think this medium is “effective.” 49 percent felt that online ads were “very effective.”
As to this illogical imbalance between investment and return – the telling statistic was the in the response that when asked what their sellers felt was important (in advertising a property) 92.4 percent said that their sellers mentioned newspaper ads.
Clearly the real estate industry continues to educate the public in the perpetuation of the belief that newspapers are valuable in marketing property, thereby gaining valuable marketing dollars to continue the perpetuation of company and individual agent self promotion in the property supplements to the newspapers. The purpose of this blog is to bring some impartial perspective to the real estate industry and I believe this is one of the key elements of this industry that needs greater understanding and transparency.
Disclosure of interest – it should be noted that the successful transfer of marketing dollars to online website such as realestate.co.nz is in the best interests of the consumer (property buyers and sellers), the real estate industry and this website – a rough estimate of the collective media spend by the real estate industry online in the whole of 2007 in NZ was less than $15m – that is less than 10% of the total spend by the real estate industry across all media, yet at that level of spend online is delivering the best return in lead generation.
The sales figures for Auckland properties as reflected by the monthly figures released today by Barfoot & Thompson certainly show the continuing sluggish property market with just 556 properties sales in June. This brings the total for the first 6 months of 2008 to 3,363 – a decline of 48% from the same period last year which saw over 6,500 sales.
The figures though on further examination do show some interesting early trends which could reflect a more stable market – one where a smaller set of buyers and sellers are meeting the market at a realistic level.
However when examining the monthly variance to prior year as shown by the yellow line the analysis indicates that the rate of decline in the case of volume sales in June was less severe than for the prior 2 months. Certainly the reporting period is beginning to track against the first months of decline this time last year, however it does at least show some signs of a base level potentially.
The average sales price monthly variance does show a continuation of the range between 0 and a negative 7 percent, with June down 2.3% as compared to June 2007. Certainly not the heady growth seen over the past 3 years, but equally not the crash as yet predicted.
The coming months will be particularly telling with as ever a deficit of buyers eager to negotiate with a continuing surplus of sellers.
It has long perplexed me to fully understand how a sophisticated monetary and financial system, so tightly regulated could come so unstuck as to facilitate the near collapse of the financial markets not just in the US but also globally through in part the subprime meltdown.
Sure the US had been benefiting from an unbridled run of economic growth and perpetuating the model of the classic “land of opportunity” – but to see how loans could be written to people who had no requirement to prove the status of their income or assets (more likely liabilities) always staggered most people (at least in hindsight) and then to see that these new borrowers could be offered “low start mortgages” with rates half of what the flexible lending rate was at the time only could have resulted in one possible outcome – something the world has come to better understand over the past 12 months.
Well an enlightening piece of the puzzle is very neatly exposed in this excellent blog post from Jack M. Guttentag professor of finance emeritus at the Wharton School of the University of Pennsylvania. The post on Inman News entitled “Transparency is king in U.K. mortgage system” sets out to explain for a US audience the key differences of the UK system of mortgage broking from the US approach – for NZ the model of the UK is almost exactly the same as here in process at least.
The most enlightening perspective for me is the fact that whereas here brokers earn commission by managing the process of “selling” mortgages offered by a large number of banks and financial institutions where the lender is transparent in the offer of a mortgage rate which the broker resells.
In the US by contrast the brokers effectively package up mortgages sold to them at a wholesale rate adding their margin to then offer this to buyers. This process means that truly 2 brokers could offer the same mortgage to the same borrower sourced from the same financial institution but packaged up at different rates especially as these rates may vary for each of the years of a loan. Some may well say this is facilitating a true open market, whilst other may see unscrupulous ambition driving inappropriate behaviour.
The rates offered by lending institutions to brokers are not disclosed to the public, but are the closely guarded jewel of the mortgage broking fraternity. Based on this understanding it becomes clearer as to how the gulf between those that borrowed and those that lent became a chiasm through which so much risky debt was written and then resold with those who financing the debt not having any clear idea of the circumstances of the borrowers.
Not wishing to draw simplistic generalisations, this explanation provided by Jack M. Guttentag does at least demonstrate that the risks that created the heart of the subprime debacle in the US could not have been executed in the same manner in NZ due to the fact that the fundamental process of mortgage broking is so significantly different.
It seems some people have taken literally the idea conveyed in the blog post of a week ago concerning featuring property on the home page of the website.
I was sent these suggestions of possible properties that might be worth featuring – you decide if they would be the kind of properties that you would want to buy?
Earlier this month I wrote a post titled “Eco design and speedy construction could deliver sustainable and affordable housing” – in it I made this statement:
It seems from this UK project that this government and the community’s aspiration to meet the ideals of affordable housing; eco-friendly construction as well as building communities could be met which such a blue-print development – all we need is a NZ developer to step up.
Well it seems that one developer has taken me at my word! – Kensington Properties Ltd.
Kensington Park is a $400 million development of 40 acres comprising over 700 properties – currently under construction at Orewa, north of Auckland.
There are a couple of very interesting aspects to the development that caught my eye – primarily the focus on energy efficiency and secondly the consumer demand.
In regard to energy efficiency the claim is that the electricity bills for owners could be cut by more than half in a project aimed at slashing home power costs. Patrick Fontein, Managing Director of Kensington Properties and Chairman of the New Zealand Green Building Council, told me that houses which would usually cost $2,000 a year to run should cost only $800, according to the projections provided by Right House, the energy efficiency advisory service set up by the state-owned energy company Meridian Energy.
Right House has been working on the project for a year, fine-tuning the eco-friendly aspects. Some of the more commonly overlooked aspects when planning a new home are the very things that can have the most impact on our comfort and health. It’s not just about saving money on power. Home heating, water heating, energy efficiency and the control of the interior environment are treated as integral parts of the Kensington Park building process.
For example floor slabs which the houses stand on will be wrapped to insulate them against heat gains and losses. The houses will be oriented on their sites for maximum energy efficiency and have water-heating solar panels installed on each roof. Low-energy heat pumps will be installed for maximum heating and energy savings. Windows will be double-glazed to minimise heat transfer. All storm-water will be treated on the site via a lake and weir system which separates sediments. Stormwater will also be recycled and used to irrigate gardens in public areas.
It is very interesting to note the financial decisions taken by Kensington Properties. They concede that there is an additional construction cost for delivering this standard of energy efficiency and eco-friendly design, but they consider the purchaser interest alone as proof that it’s well worth it. By their calculations a one-off house with these features would cost $50,000 extra, however they have driven this cost down to just $30,000 extra per home to construct because their applying scale factors by applying their approach to all of the houses at once.
This offer of efficiency, environmental consideration and master plan design that focuses on a true community is the reason behind the fact that even though real estate sales are sluggish at best at the moment the interest level of buyers remains strong for these new houses at Kensington Park.
To add to this encouraging story is the fact that the development has been awarded the CNBC Asia Pacific Property Award for Best Overall Development, Best Property Marketing and Best Architecture. This is believed to be the only time a NZ company has won this award – beating stiff competition from Australia, China, India, Thailand and Japan.
One day in the near future – in theory at least, you will be able to do a virtual fly around a property that you are interested in buying – all aided with the benefits of tiny helicopter. This will show you all of the property and the surrounding properties and landscapes! However until that time comes we must press on with what is becoming an every richer portfolio of information helping to provide context to property listings on the website.
As has been detailed recently we provide rich Open2view photographic portfolios on properties which include dynamic floor plans and virtual tours. We also have added embedded videos – all of these enhancements are designed to enable you to gain a greater understanding of properties from the comfort of your armchair.
Thanks to the technical competency of Google and their mission is to organize the world’s information and make it universally accessible and useful, we are now able to provide you richer mapping information on every property on the website for which we have an address provided by the listings agent. (As an aside we only show maps for properties for which the agent marketing the property has told us we have the right to display the address. If your property is not shown with a map it is necessary for you to instruct the agent to notify us to show the address – from our research maps are a highly valued aspect of a listing for a property for sale).
This new information is topography – terrain information provided by Google – maps with the contour lines showing you clearly the hills, mountains and valleys of the area around the property. So now for every property with a map you can see the satellite image, the 2 dimensional road map and now the terrain perspective – all adding up to a more complete perspective on a property as this beautiful property of a winter wonderland just north of Queenstown in the valley looking towards the Coronet Peak snow field clearly shows. The difference in having a terrain map is invaluable in enabling a more complete picture of the landscape surrounding the property.
As is fairly self evident these days that the real estate market is not looking too bright. As to it being a crash, a slump or a correction – that is a matter of debate. What is undeniable is that it is a challenge to try and sell a property in today’s market, especially as you are competing with over 80,000 homes for sale.
As recommended back in February if you are thinking of putting your house on the market – don’t be afraid of being a tall poppy! – the message being, you have to find ways of ensuring that your property stands out from the rest of the crowd – the crowd that is actively trying to grab the attention of prospective buyers.
In times-gone-by the best approach was to purchase a full page advert in the newspaper or Property Press, or undertake through your agent a letter box drop. Well naturally with the sophistication of the web things have moved on and the solution today is in featured listings – you go to any retail based website and you will see the “featured product” of the day or the “home page featured product” – well at realestate.co.nz it is no different – we have the equivalent – Featured Listings.
These select few listings get premium exposure on key parts of the site and are effectively become billboards on the search process – enabling your property to be seen by a wider and larger audience than would be the case with a standard listing.
Just 3 properties are featured exclusively per suburb, these properties are also featured on broader searches of the relevant region of the country. To add that complete component of premium exposure the listing is featured in rotation as one of 6 images on the home page of the website.
One of the compelling components of web marketing is the fact that for every action you can accurately track activity in the form of viewings. Compare that to a single page in the weekly property publications – can anyone accurately say how many people looked at it or actually did anything? With a web listing every time the property is viewed it is recorded, anytime an email is sent it is recorded or if the viewer goes to the agent website to see more details – all recorded.
In terms of performance of a featured listing the figures are undeniable – on average a featured listing is viewed over 2,000 times in a 2 week period – that’s compared to non-featured properties receiving on average about 80 viewings for the same period.
To see the performance of any one of these featured listings just click any of the properties on the home page and then look to see the viewing stats by day – as the example here shows the impact of promoting a listing to become a featured listing turbo charges its views.
If you want to give your property listing that kind of premium exposure then talk to your listing agent, the cost is $795 for 14 days – 24hrs per day. Or if you want our help email us or call our customer support center. Go on give it a go – your property deserves the best marketing – online.
I am I must confess an unabashed zealot of the internet. It is and has become a ubiquitous and indispensable part of my life as it has for many people, if not the vast majority of people. This situation will only continue and grow in the years to come, especially as the next generation to assume the mantle of this industry, take over the responsibility for assisting in the transaction of real estate.
It is therefore sobering for one lighthearted moment to reflect upon this scary question of what happens …. if the internet suddenly and inexplicably “went down” – from the creators of South Park, I share with you this humorous video.
I have to thank Dave Platter over at Business2 for pointing this out in his post when the web goes down. Equally as posted by Glen Barnes, as a comparable view there is also the video from Onion News Network “Breaking News: All Online Data Lost After Internet Crash” – the comment about blogs is wonderful tongue in cheek!
