The Waikato region demonstrates some significant differences to the main trends and indicators of the national view of real estate in New Zealand. Potentially the region could be seen as a “bell weather” foreseeing early on the slowdown in the market for property in 2007; and then beginning to show a flattening out of current sales of residential property, potentially establishing a base level.
The graph below shows the first signs of a slowdown in the property market in the Waikato way back in the late summer of 2007 when sales began to tumble from their peaks of 600+ per month. At the same time the levels of inventory started to rise from a base of fewer than 3,000 in the first quarter of 2007 to close to 4,000 by the end of the year. This trend was at least 6 to 9 months ahead of the trend nationally which only showed the rise in inventory as the sales in the spring of 2007 began to fall short of the heady levels of prior years.
As sales of residential property have maintained a consistent level of around 270 per month for the past 6 months so the inventory levels have fallen back by over 1,000 properties from the peak in April of 5,098. That figure for inventory of properties on the market back in April represented a ratio of just 2.4 houses out of every 100 on the market – this region has always represented a low level of inventory to dwelling ratio when compared to the national ratio which was almost twice as much at that time of 4.2 houses out of every 100 on the market across the whole country.
As property sales have reflected a more considered approach to property buying by Waikato residents so real estate search online has fallen back through 2008 – at a slightly higher rate than compared to the country as a whole. The statistics presented in the graph below tracks the monthly visitors sessions to Waikato properties by NZ’ers (red line- RH axis), matched to the national level of visitor sessions (blue bars – LH axis). Since the start of the year the activity has fallen by as much as a quarter, although the September figures for both local and national traffic reflect some spring increase in viewings.
Waikato residential property is comparatively less viewed by overseas visitors to the website than as compared to other regions of the country – on average around 1 in 5 visitors looking at Waikato property will be from overseas as compared to 1 in 4 for the whole website.
Of the main countries viewing local property the main 3 countries of UK, Australia and the US make up 75% of these overseas viewings. The breakdown in the bar chart below shows the changes over the past year in the interest shown by the top 10 countries. A significant decline has been shown by traffic of viewings from the UK which is off over 40% compared to a year ago, with Australia similarly down 25%. This shortfall has been made up for in a 50% increase from the US and the star performance of China (more than double) as well as strong growth of visitors from Canada, Netherlands and Belgium, as well as South Africa.
The website of realestate.co.nz is a dynamic environment and has the ability to analyse real-time data, most valuable of which is key lead-indicator of potential future activity, primarily regarding the level of demand for property as measured in enquiries sent from the website to agents regarding listings on the site in the form of emails. This tracking shows some interest recent trends from this index chart below:
The early high levels of enquiry generated in emails to agents in the first 2 months of this year did not sustain and with the exception of a flourish of interest in June the past 3 months has seen a subdued level of enquiry, tracking at around the same level or slightly lower than last year – potentially maintaining a cautionary view of buyers.
Properties of interest
The Waikato region covers a diversity of property from the city; to the lifestyle; to the beach. Scanning through this eclectic range I found the most viewed listing from the region is this 5 bedroom home in the Hamilton suburb of Huntington marketed by Kerry Hooper of Lugtons.
The property has enjoyed a strong level of interest from NZ and overseas, but has yet to find a buyer.
The beach at Raglan is home to the most expensive property listed in the region, this $3.85m 6 bedroom home is perched high on the cliff over looking Raglan beach – my only comment would be to see more comprehensive descriptive content and a greater portfolio of photos which would do justice to such a spectacular home.
At the other extreme the Waikato has some very affordable homes – this property in the settlement of Benneydale, located on SH20 half way between Te Kuiti and Mangakino offers 2 bedrooms and is being marketed by Mary Tapu of First National in Te Kuiti for $54,000.
Local Knowledge
The emergence of blogging by real estate agents is providing a rich source of local knowledge which can be a valuable assistance for buyers and sellers in the market. The Waikato region seems to have found a love of blogs with more activity there by real estate agents than any other area of the country. Here then is a selection – well worth checking out to see who might be a good professional advisor whether you are looking to buy or sell.
Hamilton NZ Real Estate, Duncan Munro – Duncan expresses his opinions openly and calls a “spade a spade”, have a read of The fundamental principles of agents pricing property
Motels – Kathie is a specialist real estate professional focused on the motel industry, she juggles the challenges of being a broker with the operation of a motel as well as being an industry representative. Her blog provides rich and valauble insight into the industry for prospective buyers and investors. Her first hand practical experience provides for rich content – have a read of Customer service makes or breaks a business, how do you measure up?
Greig’s – Hamilton – Greig is the Managing Director of Century 21 Geo Boyes in Hamilton, he like so many bloggers has found the medium of blogs a rich opportunity to share his high level observations on this real estate industry like this post titled Salespeople to help fund realestate.co.nz?
Brenda Beale – Brenda is an agent with Lodge real estate in Hamilton and shares in her blog a love and appreciation of the benefits of the great city – have a read of Why I’m fond of the fountain city
I’m not sure how some of the other comments relate to the article when they jump to how much deposit a buyer needs.
The market in the Waikato has clearly stabalised at around that 270 sales per month and in Hamilton at around 155 per month on average.
This stability is all very well and good but it is clearly not sufficent to maintain the levels of servise the market place has previously enjoyed. In Hamilton 3 company’s have closed in 2008 and in Rotorua I understand the figure is 4. Thats not to speak of the salespersons numbers which have dropped at least 35%.
The real estate industry is also now being strangled by the lack of interest from new entrants. In the Waikato we have seen a decline in salesperson applications in the period January 2008 to Setember 2008 from 451 in 2007 to 226 in 2008 but even more frightening is that in the last 4 months the decline has accelerated from 217 in 2007 to just 74 in 2008. This is massive 76% loss of new entrants over the same period last year.
SO IF THE WAIKATO IS A BELL WEATHER LORD HELP THE REST OF THE COUNTRY
Greig,
Valuable input and comment.
I think the focus of comments would be more relevant if they focused on the subject of the blog post. For this reason I will remove the first 4 comments.
Speaking to your relevant comments. The scale of contraction is significant, i certainly had no idea to the extent of new entrants drying up so much.
I would however say this has got to be a great opportunity for the skilled professional operators in this industry. Due to low barriers to entry and the perception of an easy role the fact was the industry had far too many agents. Now we could be in a position where we have a better balance of trained and skilled agents servicing a demand that enables them to focus on serving customer rather than “hunting for listings” – better skills put to better use – better income potential per agent too.
I see that the website of landlords.co.nz has provided further investigation of this premise that Waikato region could be a “bell weather” for the property market – well worth a read:
Waikato: A bellweather property market?