The August 2010 report shows a market heavily impacted by low sales volumes. The lack of sales would seem to be impacting the number of new listings which are coming onto the market which are down by more than 10% on a seasonally adjusted basis. This tightening of supply is not sufficient to lessen the burden of inventory already on the market which barely moved in the month. Set against this is the fact that asking price expectation of sellers remains steady following a significant fall last month.

A full print version of the NZ Property Report – August 2010 is published below and is available for download (1.3MB) and distribution.

Summary of the market – August 2010

The month of August tends to show the first signs of the spring pick-up in activity in the property market, although the most significant impact is really felt from September onwards. The month of August this year showed little signs of such a pick-up, with new listings below 10,000 and down nearly 11% on a seasonally adjusted basis.

This decline in listings would ordinarily signal a tightening of the market at this time of year, were it not for the existing high levels of inventory already on the market and the flow-on impact of slow sales. The reported sales for July from REINZ were 4,411 which was the lowest July on record, down 27% from July 2009. These slow sales are resulting in inventory levels of unsold houses remaining above 46 weeks as compared to the long term average of 38 weeks, reinforcing the view that the market still favours buyers over sellers.

Behind the headline national figures lies a continuing sense of a two speed property market. The major metro areas are certainly stronger than provincial NZ.

• Auckland has inventory levels closer to long term average (36 weeks vs. 33 weeks), new listing numbers were trending lower than the national average and the asking price has been edging up for the past couple of months.
• Wellington equally is now at a level of inventory only slightly above long term average, new listings are down and asking price is steady.
• Canterbury at 32 weeks of inventory of unsold houses is sitting right on the long term average, it has steady asking price and new listings volumes down 10% compared to prior year.

Asking Price

Asking price expectations picked up slightly in August having fallen significantly in July. The truncated mean asking price for August was $403,423, down just 0.6% on the prior 3 month average and up 1.6% on August last year. This would indicate stability in price expectation amongst sellers.

The current asking price still lags 6% behind the peak of the market – some 34 months ago now in October 2007.

New Listings

The volume of new listings coming onto the market fell again in August with under 10,000 for the first time since June last year. As the chart shows this is the 5^th consecutive month of decline.

Over the 12 months to August 2010 a total of 144,893 new listings came onto the market. This compared with 134,165 in the prior period – an increase of 8.0%, on the same comparison property sales have not kept pace rising only 2.8%.

Inventory

The level of unsold houses on the market at the end of July totaled 50,138 down 4.3% from July. This represented the equivalent of 46.1 weeks, as assessed on a seasonally adjusted basis.

The inventory level did not fall as markedly due to slower property sales.

Regional Summary – Asking Price Expectations

Nationally the asking price expectation of the new listings in August showed very little change following the significant fall in July. Measured on a month-on-month basis or versus a 3 month average the variance is small. This would indicate that sellers sense that no further adjustment is required to ‘meet-the-market’ and thereby the expectation of buyers.

Across the country the trends are mixed with just 5 of the 19 regions showing rises in asking price expectations – all of which are below 5%. On the declining side there were some significant shifts with Central North Island down 21.5% and Wairarapa down 15.6%, both of these two regions are now sitting at a low point in asking price stretching back to Jan 2007.

Regional Summary – Listings

The steady decline in new listings seen for 5 straight months is beginning to tell in the market with early signs of what could be a looming shortage, if sales were to take off.

Around the country the predominant trend is fewer listings on a year-on-year basis; 10 of the 19 regions showed falls with a further 4 showing stable listings volumes.

In four of the regions (Northland, Waikato, Coromandel and Wairarapa) the level of new listings in August were the lowest months on record stretching back to January 2007, indicating the state of the market in these provincial areas.

Regional Summary – Inventory

Despite the decline in new listings the inventory of unsold houses remains doggedly high. This is especially true of provincial areas more than metropolitan regions of the country.

Examining the 3 main centres shows that they are close too or actually in line with long term average levels of inventory thereby indicating that in these cities the market is well balanced.

Across the provincial areas of the country though the picture is very different as the swathe of green shows on the map indicating the higher levels of inventory as compared to long term averages.

The only provincial areas bucking this trend are Otago and Nelson. The latter particularly is conspicuous in now having an inventory below long term average and thereby indicating that the market is now edging more to a seller’s market; something not seen in this country for a couple of years.

Lifestyle Property

Lifestyle property listings were subdued in August with 840 new properties coming onto the market, down 5.2% on August last year. Compared to the same period for the past 2 years lifestyle property listings could be seen as a fairly steady market.

In regard to asking price expectation the truncated mean for August was $556,440, this is up 3.8% on July and up 3.4% on the prior 3 months indicating strength in price expectation.

Apartments

A total of 516 new apartment listings came onto the market in August. This represents a 7.7% decline month-on-month and a 13.3% year-on-year decline. Whilst not the lowest month, new listings in this sector continue to remain flat as they have done for the past 3 years.

The Auckland market saw 336 new apartments listed, down 3.7% month-on-month and 8.9% down year-on-year.

In terms of asking price expectation the truncated mean asking price in August was $358,030 which is identical to the prior month and down 2.6% compared to the prior 3 month period.

Property Price Index

Comparing the sale price of properties across the country to the asking price expectation is not a perfect comparison, however the trends tend to align. The benefit is that the data for asking price is of the market today, whilst the selling price is reflective of the market active between 4 and 6 weeks ago. The latest comparison is highlighted 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 July, a total of 165 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 around 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 27,000 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 4,300 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 1,140 offices, the company represents over 95% of all listings from licensed real estate agents in NZ.

The full NZ Property Report for August 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 September 2010 will be published on this website on Friday 1st October 2010 at 10am.

The conference is very much influenced by the experiences I have encountered in attending the Inman Connect conferences in the states each year. Coupled with the style and richness of the Inman conference the NZ conference echos a quotation which I first heard at least 3 years ago and still to this day rings so true:

“Traditional agents will not be replaced by technology.. they will be replaced by agents with technology”

The quote comes from an Australian real estate conference and every time I use it; it reinforces to me the critical requirement of real estate professionals to recognise that technology is not the threat, but rather it is the means to take a giant step forward and surpass all those in the industry who believe technology is the threat. Over these past years I have been keen to get together an event in which we can help those in this industry who want to move ahead and who are keen to meet like minded individuals and listen and collaborate with the best in the business. This conference is the realisation of this ambition.

The event features some great contributors:

From the US we have invited Joel Burslem. Joel is a respected expert within the real estate industry. He is a blogger, real estate marketer and consultant. He founded the Future of Real Estate Marketing blog whilst working at Inman  News and now is a key part of the consultancy firm of 1000 Consulting. Joel will be providing an overview of the trends in digital marketing around the world with detail around the role of social media in this industry.

From closer to home we have Nicholas O’Flaherty who is MD of Bullet PR, a respected specialist media consultancy company whose clients value the skills and innovation Nicholas’ company brings to the implementation of social media. Bullet recently hosted the enormously popular Social Media Junction conference with outline plans for a further event later in the year. Nicholas will be picking up on Joel’s presentation and bringing the local perspective as well as the practical examples of the best in the marketplace today in NZ using all forms of social media.

Addressing the ever present question in relation to the web – that of search we are very pleased to have Charles Coxhead joining the conference. Charles has a long and distinguished career specialising in search. As an online search and marketing consultant he has worked with clients such as Air New Zealand, Expedia as well as Realestate.co.nz. He will bring some focus to the ever evolving search landscape that nowadays transends beyond just Google into real time search as well as hyper local search and in so doing will apply the test as to the relevance for the real estate industry.

Our final keynote speaker is Simon Baker. Simon is well known and highly regarded within the real estate industry primarily in Australia where for 7 years he lead the stellar growth of realestate.com.au into the substantial ASX listed company with revenues exceeding A$160m. Since leaving the REA group, Simon has persued a strategy as an investor and consultant, his focus in online classified businesses with international scale and within that area he has investments in a number of Asian real estate portals. He brings to the conference a reflection on the criticality of the real estate portals and the heart of the business which is exposure to real estate listings through online marketing. He will also provide some interesting insight into the comparison of development between Australasia, Europe, US and Asia when it comes to real estate online.

The event promises to be a fast paced, rich content experience which in addition to the keynote presentations will feature workshop sessions on Twitter, Facebook, blogs and online etiquette. The day culminates with a panel discussion on the topic of the future of real estate and its implications for all involved in the industry.

The event is for the real estate industry and anyone involved in the industry at whatever level or in whatever capacity is welcome to register. There is a limited number of spaces still available so if you are interested please register before the event as registrations need to be made online prior to the event.

How strange then to be the recipient of this tweet from Matthew Harman:

Latest issue of Property Press says there’s 56% ‘future intention’ to advertise in this mag. Ahead of online. Course it is 2007 research

I was fairly staggered that this could be the case, so I went to search the local Property Press. I found the Central Property Press for Auckland and on page 32a I found this advert.

In the small font below the headline of NRB: Future Advertising Intentions I found the reference of “National Research Bureau 2007″ – so yes the Property Press is trying to encourage advertisers using research data that is 3 years out of date.

Still in shock from this attempt by the Property Press to persuade the buyers and sellers of the merits of Property Press over “internet websites” (as opposed to ‘other’ websites!!), I was knocked off my chair on Saturday when reviewing the NZ Herald weekly supplement “Herald Homes” – on page G47 was this advert.

So the NZ Herald recommends that you use their publication based on readership survey from July 2007 to June 2008 – another 3 year old research survey!

Clearly the property market was a lot healthier 3 years ago – however people are still buying and selling homes and are using all forms of media to advertise – the fact is that in 2010, 8 out of 10 people indicated in the latest Nielsen survey that they had used a specialist real estate website in the past week, compared to less than 1 in 2 using a specialist magazine and less than 1 in 4 using a metropolitan newspaper – this data is right up to date – undertaken in May 2010.

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 July fell by 2.9% from June on a seasonally adjusted basis. A total of 4,411 property sales were recorded by licensed real estate agents in the month of July. Back in July 2009 the total sales was 6,014. On a moving annual basis sales are up 2.8% with 63,701 sales in the past 12 months as compares to 61,952 in the prior 12 months.

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 July to $359,525 from $363,925 in June. The June price is up just 1.8% as compared to July 2009. As highlighted in the chart above the sale price across the country has remained fairly stable over the past 9 month with some small ups and downs. The current price is still 3.1% below the peak price in the market back in November 2007.

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 inventory of properties on the market measured in equivalent weeks of sale picked up again in July. It now stands at 47 weeks as compared to 47 weeks in June and compares to 33 weeks in July last year. 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

Northland

Auckland

Coromandel

Waikato

Central North Island

Bay of Plenty

Gisborne

Hawkes Bay

Taranaki

Manawatu / Wanganui

Wairarapa

Wellington

South Island

Nelson

Marlborough

Canterbury

West Coast

Otago

Queenstown Lakes

Southland

The median property price in Southland rose sharply in July, from the June figure of $172,000, it rose to $210,000. As compared to a year ago prices in the region are in the month are up 10.5%.

Property sales in the region rose slightly in July on a seasonally adjusted basis with to 109 properties. On a moving annual basis property sales are down 3.8% with 1,632 properties sold in the past 12 months compared to 1,696 in the prior 12 month period.

Inventory of houses on the market grew again in July to 46 weeks of equivalent sales compares to the 44 weeks in June. This June inventory of 46 weeks of equivalent sales remains high as compared to the long term average of 26 weeks. This would indicate that the market is still favouring buyers.

The median property price in Otago rose significantly in June from $227,500 in June to $245,000. As compared to a year ago prices in the region are up by 9.9%.

Property sales remained fairly stable on a seasonally adjusted basis. In June there were 196 sales compared to 182 in June. On a moving annual basis property sales are up just 1.6% with 2,736 sales in the past 1 2months compared to 2,693 in the prior 12 months.

The inventory of houses on the market picked up slightly in July to 31 weeks of equivalent sales. This July inventory of 31 weeks is ahead of the long term average of 26 weeks. This would indicate that the market is now tipping in favour of buyers with more choice of properties on the market.

Property prices in the Central Otago Lakes district slipped further in July to a 3 year low of $390,800. As compared to a year ago prices in the region are down by 4.9%.

Property sales in the region also slipped significantly on a seasonally adjusted basis by 46%. There were just 48 properties sold in July down from up from 85 in June. On a moving annual basis property sales are up 5.6% with 1,014 sold in the past 12 months as compared to 960 in the prior 12 months.

Inventory of houses on the market fell to 95 weeks of equivalent sales, this despite the fall in sales volumes. This July level of inventory is very close to the long term average of 91 weeks. This would indicate that the market is fairly well balanced between buyers and sellers.

Property sales on the West Coast slipped in July on a seasonally adjusted basis by 17% with sales of 32 properties down from 36 in June. On a moving annual basis sales are up 12.7% with 374 properties sold in the last 12 months as compared to 332 in the prior 12 months.

Inventory of houses on the market fell from 161 to 131 as measured on equivalent weeks of sale basis. This level of inventory is still considerably higher than the long term average of 99 weeks. This would indicate that the market is still firmly favouring buyers.

Property prices for the West Coast are included in the broad Canterbury / West Coast regional median property price, in July this price was $310,000 up 4.4% on July 2009 price.

Property prices based on the stratified pricing model for Christchurch rose in July to $351,375 from $349,595 in June. Compared to July 2009 prices are up 7.4%.

Across the Canterbury region property sales remain flat on a seasonally adjusted basis with no movement between June and July. There were 651 sales in July as compared to 674 in June. On a moving annual basis sales are down very slightly by 1.8% in the past year 9,028 properties have been sold as compared to 9,196 in the prior 12 months.

Inventory of houses on the market remained flat in July at 35 weeks of equivalent sales; this figure is close to the long term average in the region of 31 weeks. In overall terms the property market across the Canterbury region is fairly well balanced between buyers and sellers.

Property sales in the Marlborough region fell by 33% on a seasonally adjusted basis with just 46 sales in July. On an moving annual basis sales are down 21.2% with 738 properties sold in the past 12 months compared to 936 sold in the prior 12 months.

The level of inventory of houses on the market in July fell to 59 weeks of equivalent weeks of sales. This level of inventory is significantly higher than the long term average of 46 weeks. This would indicate that the market is favouring buyers.

Property prices for the Marlborough region are included in the broad Nelson / Marlborough regional median property price, in June this price was $327,000 down just 0.3% on the median price in July 2009.