The Unconditional Blog

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5

Shortage of listings is key to the state of the property market

The monthly sales report from the Real Estate Institute (REINZ) states clearly that “Listings tight in June housing market” – this assessment comes from “strong indications from agents in many regions that the supply of properties is really tightening“.

This perception is reality; the data in the monthly NZ Property Report underpins this with the numbers to show the decline in new listings as detailed in the chart below.

Listing numbers have been falling steadily for over a year, and matched to a slowly rising rate of sales, is beginning to show in the declining stock of homes on the market. This could potentially lead to a demand heavy market which could see price pressure in the medium term.

To better highlight the listings to sales ratios; I have developed these charts to show the picture nationally and regionally. I have assessed the property market based on the first 6 months of 2011 vs the first 6 months of 2010. Nationally this year is showing sales down 1% – however if you remove the Canterbury region the national picture shows a 4% growth in sales. Matched to this is a 14% decline in new listings (17% decline if you include Canterbury).

The chart ably demonstrates why Auckland is most definitely feeling the effect of a tighter property market – sales up 10% and listings down 13%. Wellington sales are sluggish but again listings are down 12% whilst Canterbury is experiencing the unique aspects of the earthquake of February.

Looking around the country the regions that are showing growth in sales year-on-year are grouped in the chart below. Eight of the 19 regions show year-on-year growth in sales – the West Coast of the south island topping out with a sales rise of 14%. All regions though show declines in listings.

The remaining 11 regions of the country presented in the chart below are witnessing year-on-year sales declines, some double digit declines. Equally they all (with the exception of Nelson) are seeing declining listings, largely in line or greater than the decline in sales.

Article Discussion

  1. JohnB says:

    The rental market in Wellington is also showing a decline in listings, matching the decline in sales listings. The usual trend is for sales and rental listings to move in opposite directions, but for the last few months they have both decreased quickly as shown here;
    http://bit.ly/nenbZM
    I would be interested in comments on why.

  2. JohnB

    It is very interesting to view your analysis. There are a couple of points I would like to make:

    Tracking rental listings is a challenging issue as unlike property for sale listings can sometimes (dependent on state of the market) be on the market for a matter of days, whereas property for sale generally is on the market for 3 weeks or more on average.

    We are working to be able to provide a richer data analysis of rental listings shortly to be able to report on the rental market with more accuracy and frequency. Our data whilst only from professional property management companies goes back to 2006 and is complete data of new listings and activity of listings.

    A note of caution of the Trade Me stats is that their subscriber base with the real estate industry has been growing significantly over the past 12 – 18 months, I would estimate that they have now have very close to 90% of all licensed offices whereas a year or so ago that figure would have been around 75% to 80%. By comparison Realestate.co.nz has maintained around 95% of all licensed office since 2006.

  3. Alastair,
    Cheers for the stats and charts. You’re right that compared to previous years there is a drop in volumes of supply.

    But I wonder about actual supply shortages.

    Is it really the case the market is oversupplied?

    I think it’s worth looking at actually how many properties are listed in total in any one month and how many actually sell.

    For example, Barfoot and Thompson had 5,067 properties on its books at the end of June, yet sold just 873 properties.

    What happened to the rest? Why didn’t they sell? Sellers are not moving their prices to meet the market.

    The real problem for real estate agents is there are not enough sellers willing to cut their prices to meet the market and clear it.

    What I think you’re talking about is a lack of willing sellers willing to meet the market rather than enough listings.
    cheers
    Bernard

  4. Bernard

    As we all know property is not a homogenous item and shortages are not for a generic house. You could have a surplus of 3 bedroom houses of one style / design / construction / location and a deficit of 3 bedroom houses of another style / design / construction and location.

    We are keen to use our complete database to try and work on the information around this issue of the life-cycle of properties – how many listed, how many sold, how many withdrawn, how many re-marketed. This would go someway to answer these questions you pose.

    As too the view that there are too many properties on the market with seller expectations of price above the market demand of those buyers, this would be a good opportunity for the input of some agents to share their views. The numbers (inventory and days on the market stats) would seem to support this argument.

  5. […] could potentially lead to a demand heavy market which could see price pressure in the medium term.Read the full realestate.co.nz report hereRead the REINZ property report here      Share this info:var […]

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