The Unconditional Blog

The impartial voice of the industry

 
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Property searching remains bouyant

Posted on: December 13th, 2007 | Filed in Website news

Website trafficTraditionally searching for a new home takes a back seat to the mad rush for those last minute Christmas presents. This year however internet property searchers seem as glued as ever to their laptops.

In an average week over 300,00 unique browsers (unique visitors) across NZ seek out real estate online. This graph shows weekly domestic traffic to real estate websites and clearly shows the growth in online activity in the 2nd half of the year. The anticipated Christmas slow down witnessed last year seems to be holding off, the key question is what factors are influencing this retained interest?

1. Are we just seeing a greater degree of researching being done online – reflecting a more knowledgeable consumer seeking comprehensive information?

2. Are we seeing the power transfer from sellers to buyers – does that motivate some people to see this as a great time to buy?

3. Is there a belief that interest rates are at the peak and therefore affordability at today’s rates can only look better in the future?

4. Is the more compelling and richer information provided by real estate websites driving more reliance on web sites that traditional media of newspapers and magazines?

It would be interesting to know your thoughts and personal experiences.

(As a foot note, the statistics presented here are from Nielsen NetRatings and cover some 27 individual real estate websites in NZ)

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House prices up or down – who to believe QV or REINZ?

Posted on: December 11th, 2007 | Filed in Media commmentary, Money Matters

We seem to have opposing views as to the state of the housing market and all eyes are on the Reserve Bank Governor as to his take on this twist in the property soap opera.

In the left corner representing the state owned enterprise QV we hear that the average price in November was $393,198 with prices now having fallen for the 3rd straight month.

In the right corner representing the Real Estate industry we have REINZ who states that prices have actually increased with a median price in November of $352,000 up from $350,000. This on the back of an increase in sales volumes of around a thousand from October.The key in this tussle is not the motives of the reporting agencies but the principle of where the data comes from and how it is reported. As the old saying goes – there are lies, damned lies and statistics!

The reported statistics from the Real Estate Institute are the easiest to explain. They collect reported unconditional sales data from licensed real estate agents around the country every month – in November there were 7,837 house sales and in the month of November the median price was $352,000. Now a key here is the statistical metric of median price – not average price. Median is the center point of a range in this case the 3,918th sales price when you line up the 7,837 sales from highest to lowest.

QV data is not as easy to explain. Their source of data is the local councils. This data comes in to them slowly over the months following legal settlement of sale that is why they report a figure for data collected for a 3 months. It is likely that the make up of data will cover sales going unconditional up to 2 to 4 months ago, which has trickled into the local authority stats in the past 3 months. Additionally they report average sale price – a very different statistic.

I hope this sheds some light onto why there are differences in the absolute numbers as well as the trends.

As ever with statistics, you will find as many people in favour of one presentation of data as you will another (average price vs.median price), however I firmly believe that timeliness of data should always be championed in reporting.

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Newspapers using property headlines as self-serving advertorial

Posted on: December 9th, 2007 | Filed in Media commmentary

Our national newspaper (or at least our largest circulation paper) The NZ Herald leads today with the story “Buyers in line for good deals as market booms”. This centrepiece of “news” is nothing but blatant self serving advertorial for Adam Parore mortgages and the The Herald’s own property advertising section. Surely the Herald would have thought that more important social issues such as “Three murders in one night” worthy of a more prominent feature.

With the slowing market of the past few months the lending sector has hit a wall. Brokers had had to fight to find business; matched with the fact that newspapers in general are losing relevance and are being used less and less as a resource for real estate information as real estate search moves online and you have the ingredients for a great self-serving headline.

Research carried out earlier this year for the real estate industry showed that over 80% of property searches start online (a growth from 70% a year earlier), whilst national newspapers fell to just 50% (down from 57% a year earlier). Add to this the well known and understood fact that people under 30 do not buy or read newspapers, and you can see the logic of their business tactics.

What I find even more amusing and somewhat ironic is that instead of the Herald quoting their own website for statistics (search4homes) of properties which are demonstrating reduced prices, they refer to their competitor’s site – Fairfax’s Trademe property section! Given the numbers it is not surprising; the Herald has 6,600 properties, Trademe has 55,000, whilst our site has over 93,000 listings.

Clearly it is now the case that in a world where online is sucking the life out of newsprint property advertising the tactic adopted by them is obviously do anything (including referencing your competitor and demote “real news”) rather than capitulate to the market trend to online searching for property and report news stories!

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So what price is that property on the site?

Posted on: December 9th, 2007 | Filed in Buying / Selling a home, Money Matters, Online marketing, Website news

It is the question that ever visitor to our site asks – if not directly to us by email, then at least to the screen in front of them?

If I could do one thing for this site it would be to make sure that every property featured had a price.

Homes for sale are not like cars, where there is no question that a 4 year old Honda Accord is worth $20,000. Every house on the other hand is unique and therefore only the classic market forces of supply and demand will establish a price. We want to work to improve the transparency of pricing on all of the listings on the website to help you more effectively search.

To start with a useful piece of information for you to know. Every agent posting a listed on the site is required to provide us with either a stated price (which we display) or if it is being sold as a tender or auction or is just POA or Negotiation (or other acronym) , the listing agent must supply a price range. Armed with this information we deliver results for searches that you make on the site.

So if you search for homes for sale in Paraparumu priced between $400,000 and $500,000 you will see a selection (based on today) of 39 homes, only a third of which have a price, the rest are marked as “offers” or “negotiation”. All of these listings however were provided to us by agents who told us that the price range fell between $400,000 and $500,000. We do not, and would never try to be clever and add properties to individual priced searches for which we know the price range fell outside the range you selected.

Having explained this part of the site mechanics, it is clear that some agents select ranges that are just too broad. This is something we do not condone and we are constantly communicating with the industry to try and get them to price more openly all properties to help you – the buying public.

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Affordable housing – can we please learn from others!

I am not sure if I am more amazed by this proposed bill being introduced by the Housing Minister to provide for affordable housing or by the only reaction that the media could find to report – that being the Property Council’s view that the outcome of the bill will result in higher building costs as developers, forced to take a lower margin on “affordable” housing pass on this “cost” to regular buyers.

Is everyone missing the point here?

This proposal is unworkable, how would it ever be possible to demarcate a property as “affordable” – it is a house, indistinguishable from any other house. I shudder at the thought of a highly expensive bureaucratic team established to monitor these new “affordable” houses so that some “unscrupulous” owner did not try and sell such a house on the open market and land a sizable profit.IKEA BoKlok House - affordable housing for the UK

The housing market is a private sector open-market economic model driven by supply and demand – for the government to try to intervene is naive at best. Sure there are issues with affordability of homes for young people, but trying to create an artificial market for a designated house is impossible – surely we have some intelligent advisers in our government who could look to see what they can learn from others.

Overseas there are very workable models of assistance in the area of finance to help young people buy a home (of their choosing – not some select group of properties our government want us to buy).

Additionally why not let the market demand encourage developers find new ways to build more efficient modular houses – try looking at the IKEA housing model in the UK. We are not alone in this world in having social and economic problems – how do we let politicians come up with such half baked ideas!

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One relevant property picture is worth a thousand words

Posted on: December 2nd, 2007 | Filed in Agent Tips, Online marketing

With 92,000 properties on the website at this time, the question is as ever how to find what you are looking for? – whether it is a classic 50’s bach on the shores of lake Rotoiti, a city pad in Christchurch or a slice of rural lifestyle in Cambridge. The fact is there is no science to searching for property – it involves the right balance of “heart and head”, however there is one element without which no search can be complete – images.

Given the criticality of images as part of a property search it never fails to amaze me the number of properties that get posted on our site (and other property websites) with either no photo or photos bearing no relevance to the property.

I speak to what is sometimes thought of as “innovative marketing” by some real estate agents. The photo of a dog to highlight that his “master and mistress” are moving and “Ben needs a new home!” – or a 6 year old perched on the suitcases – “We’re off to OZ – the house needs to be sold!” or worse still a photo of the Taj Mahal – “Our home is a temple, it can now be yours”.

Such innovative marketing misses the key point about the internet – it satisfied a functional need, people want to efficiently and quickly peruse the equivalent of every real estate office window and filing cabinet – all from their home PC or office desk – what they want is relevant photos of the property, lots of photos, and lots of relevant photos. If an agent tries to be clever it can be damaging and counter productive as people skip the property and move on down the list of properties.

Agents please note the public are speaking!

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Selling your house online?

Posted on: November 26th, 2007 | Filed in Buying / Selling a home, Online marketing

Seems such an attractive proposition in this world of ubiquitous “always on” internet, just imagine the reaction of your friends as sipping that coffee you nonchalantly advise that you have just bought or sold a house – all from the comfort of the local cafe!

The reality is somewhat different – just to debunk the myths.

In New Zealand the transaction of land (and in most cases by default property) requires a written contract to be signed and a consideration (money) exchanged. contract-261107-sm.jpgThe process of buying and selling houses is however anything but easy and the exchange of a contract is the final stamp on what can be a very demanding and fraught process.

Therefore for a website to say that you can “sell your house” for xx dollars is being somewhat conservative with the truth.

Online is a medium for communication, a highly efficient and powerful medium – in the case of real estate it provides a very efficient means of advertising available properties for sale or rent – rich images, comprehensive information all go a long way to help prospective buyers find what they are looking for. But what it can never do is sell a house!

Having recently seen the proposed reform of the real estate agents act presented by the Associate Minister of Justice it surprises me that when they talk of the reforms being in the best interest of the consumer, why then did they not choose to address the issue of the role of some real estate websites and the services they offer?

It is very interesting to note that in the UK the Office of Fair Trading brought about the closure of a property website set up by Tesco (one of the largest UK supermarket chains) based on this position:

“If an internet property retailer does anything for their clients more than simply carry an advertisement, for example if their website has a message board for sellers to contact buyers, they will be doing estate agency work. It may well be that most internet property retailers are acting as estate agents.”

Clearly in the UK they feel that it is appropriate to protect the consumer and do so by providing the appropriate organisation with the teeth to act – here our government chooses to see only half the story and attack a section of the real estate industry (the agents), missing an emerging and significant component.

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“Must sell – owner wants to take a bath!”

Posted on: November 22nd, 2007 | Filed in Buying / Selling a home

That is a certainly an example of a traditional attention grabbing headline by a real estate agent – at least a little bit “tongue in cheek”.

A change of personal and/or financial circumstances are obviously the main reasons why people buy and sell the family home and most of these changes have a time frame attached. But as this market slows and houses take longer to sell, the heat comes on and owners get anxious and unfortunately the For Sale sign bleaches in the sun.

The agent might change the copy then from ‘Vendor promoted to Paris – must sell” to “Desperate vendor flown to France – make an offer’.

What I wonder about this type of marketing is whether shouting ‘desperate’ or ‘must sell at any price’ gets results or more importantly gets the right results?

It’s certainly an attention grabber!

Investors and bargain hunters will reach for their mortgage brokers. But does it also say a very poor price is inevitable? Does the term ‘Desperate’ mean ‘Look over here – Vendor is about to take a bath’?

I guess it ultimately depends on whether ‘desperate’ means the same thing to the buyer and seller and whether the owner must sell at any price or needs to sell at a certain price?

There’s 30+ properties currently on the site today under the search ‘desperate’ – not all actually categorised as desperate to sell, this one in Johnsonville is just in desperate need of decoration! but these ceratinly fit the bill:

Taupo property – “Vendor said don’t make me sound desperate! – so we didn’t”

Onehunga property – “Urgent sale! Urgent sale!”

Murrays Bay property – “Help! A Desperate Situation!”

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How slow will it go?

Posted on: November 16th, 2007 | Filed in Buying / Selling a home, Media commmentary

It’s now widely accepted that the property market in NZ has slowed down.

There’s been a lot of speculation in recent months about our property bubble, when it will burst and how loud the bang?

The media has been true to form with sensational headlines describing a housing ‘slump’ or ‘crash’ while the Chief Economists try to temper the media’s excitement saying it’s a market ‘correction’.

The question now is, how slow will it go?

We may not know the answer for many, many months but there are some known factors that may give perspective.

  1. Ongoing media commentary about ‘property slumps’ will contribute to sales and prices falling – the self fulfilling prophecy phenomenon.
  2. The Banks know this, which is why their Chief Economists will continue to be conservative with their predictions.
  3. Despite the slowdown, the Reserve Bank is still expected to increase the Official Cash Rate because of rampant inflation.
  4. The property market commonly slows in the run up to an election – people hold off making big financial decisions until the make-up of the new government is known.
  5. It’s almost election year but it’s likely to be a full 12 months before we know who will govern.
  6. Mortgagee sales and hard working kiwi families losing homes makes for great headlines but poor polling in an election year, so the government will be working to ensure there’s no bubble blow-out before November.

Since the speculation about the slowdown started, we have been closely monitoring traffic to the website, searches, listings, length of listings on the site and other indicators that provide market information.

Interestingly whilst the stock of property on the website has risen sharply over the past 6 months from 74,000 to now over 91,000 as a result of the slow up in sales, the traffic to the website has grown from 240,000 unique browsers to now over 265,000 last month.

Clearly the buying public of NZ are as is usual in spring actively thinking about moving home and the sale and purchase of a property, however this year with the transition from a sellers to a buyer’s market these consumers are more patient and are more actively using search facilities online. Spending longer to better prepare them with a deeper understanding of the market place well ahead of any prospective property purchase.

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THUNDERBIRDS ARE otaGO

Posted on: November 13th, 2007 | Filed in Architecture & Construction, Regional News, Renting

A real estate agent in Christchurch has bought the rights to be the first kiwi in space via private rocket. To be honest, a trip to the moon is probably high on the wish list for us all. Personally, I would be happy just to travel out far enough to float around in a weightless environment; I’m not that worried about hitting a par 3 on the Ptolemy Crater Course.
Given that this may not come to pass in our lifetimes – what could be the next best thing for astronaut-hopefuls is a spaceship lifestyle on earth in Dunedin.

Experience life like Lady Penelope, Virgil and Scott with the added bonus of being right next to the beach

This futuristic flat features an open plan orbiter with one bedroom, built in furniture, small kitchen and separate bathroom with shower and toilet.

Otago spaceship It has a large pod, which is docked onto the back of it for use as an extra lounge or office – earthlings call this a conservatory. There is also a garage for parking your space cruiser and off-space-highway room for visitors to dock their sandcrawlers. Clever co-ordinates and orbit speed means this ship catches all day sun and views of Blueskin Bay (when you’re not on the dark-side of the moon).For times when you want to get back down to earth – a quick space-walk lands you on Warrington Beach.

Please note: Aliens wanting to take up the tenancy may need a reference.

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