Tag Archives: Statistics

How the general election impacts the property market

Election Property Market

The hoardings are up (with a few to still to be updated), the door knockers are out in force, and our newsfeeds are flooded with stories detailing the latest resignations and policy announcements – election season is well and truly underway.

Policies and personalities aside, we’re often asked by clients how an upcoming election is likely to affect the property market, particularly sellers who ask whether it’s better to hold off until it’s over or simply to push on through with getting their property on to the market. The conventional wisdom is that markets do not respond well to uncertainty, and given recent developments, the election’s outcome is anything but certain. On the other hand, I’m yet to meet a buyer who has said that they’re going to forego a purchasing opportunity simply because they do not know the makeup of the next government.

While it’s easy for us to rely on anecdotal evidence and the vibe of the market, thankfully we have access to a considerable body of data from REINZ dating back to 1992. Back in 2014, real estate commentator Alistair Helm at Properazzi came up with a seasonable comparison. It uses the three preceding months leading up to each general election date and calculates the representation those months were of the total sales for that year. He then compares that % representation as a single figure against the normal for the same 3 months of the year based on a larger set of preceding data going back to 1992, as follows:

Election Year Sales Graph

Helm comments:

You could say that on average general elections depress property sales as 5 of the 8 elections caused property sales to decline as compared to normal. However there is no real consistency. The completely and significant opposing variance in the results for 1993 and 1996 are too significant to ignore.

Our friends at Bayleys have also analysed the data dating back to 2000:

Our analysis indicates that the majority of those choosing the ‘wait and see’ approach around election dates are property investors, as it is this section which is more likely to be impacted by changes in government policy.

The decision by owner occupiers looking to enter the market or move home tends to be driven by changes in personal circumstances, such as marriage, divorce, having a family, changing jobs, retiring etc. Once these circumstances are in play, the decision to purchase a new home is unlikely to be delayed solely because they coincide with the date of an election.

While there are signs that the Christchurch property market is cooling, this cannot be solely attributed to the election. The post-quake residential construction boom has boosted supply, while LVR restrictions are dampening demand, resulting in fairly modest price growth. The great thing is that a steady market empowers buyers and sellers to make informed decisions with confidence.

Team Griff’s Winter Update

Winter 2016

2016: Strong and steady

Backing onto 2015, a year of continued high sales volume, the 2016 real estate market in Canterbury has started strongly with the first quarter showing that momentum continuing. With a local economy remaining flush from the post earthquake rebuild there are still good cash reserves being readily channeled into local real estate. However the overall activity in the local market is more tempered than that of previous years and purchaser’s are enjoying the luxury of more choice, especially in the fringe areas and the newly built spec home market. It is expected however, that volume will continue to be strong as purchaser confidence remains high and investment in Canterbury real estate is seen as desired and a sensible option.


Capital growth rates remain constant

The bigger picture of the Canterbury province clearly indicates that supply has now overtaken demand and largely the post-quake housing shortage has been soaked up by vigorous building over recent years. This has largely been driven by the supply and release of land into the fringe areas of the city with the expedited approval process of the subdivision of land by the local authorities. This has resulted in a larger supply which in turn has brought an easing on capital growth rates.


Canterbury real estate likely to remain affordable

Full credit to the powers that be at the CCC and surrounding district councils, CERA and ECAN etc who post-quake moved swiftly to approval land for development. With such an injection of readily available land into the greater Canterbury market/residential rebuild has inevitably resulted in a leveling in capital grow rates over the previous 12-18months. Ultimately this will provide a more affordable housing market moving forward. This already is having a spin off effect on values in several sectors of the Canterbury marketplace and in our opinion will avoid a “Auckland type market” where limited land availability continues to drive housing values to record levels. With an abundance of flat readily available land on the outskirts of the city it is unlikely that we here in Canterbury will run out of land in the foreseeable future!


‘As is, where is’ market continues to perform

Having just reached a new milestone of 180 sales of “as is where is” property Team Griff continues to produce solid results, achieving a 95% success rate under the hammer and to date since the inception of this market having sold every property but one. In most instances higher than expected sale prices have also been achieved, where healthy competition has fueled such results. Do talk to us for a no strings chat if you need to explore the options available to you.


New secondary schools a boost for the east

With a state of the art shared campus planned, this will to be a huge asset for the East/North Eastern suburbs and will contribute to underpinning real estate values moving forward beyond the post-quake economic bubble. Click here to read more.


Healthy balanced market likely

All things being equal, it is my opinion that the remainder of 2016s residential market will continue to forge ahead, riding on the back of purchaser confidence, low interest rates and a flush local economy.  With the CBD tracking well and key cornerstone projects evolving, the commercial market is beginning to underpin the bigger picture of both the rebuild and investor confidence.


Team approach key to success

With Team Griff now being a tight knit team of five, you can rest assured that your needs will be met swiftly and efficiently. Whether if is a general enquiry, or simply checking on an open home time through to an appointment to have your home appraised, our systemised approach will mean your enquiry can be dealt with on the spot. At the recent Harcourts Gold awards, taking out the # 4 spot, the Customer Services Award plus the Auctioneers’ Excellence Award was great validation that the team are each playing their part in providing a high level of service to our clientele.

Griff and the team

Signs that LVRs may be having an impact

April 2014

The Wall Street Journal reports:

New Zealand house prices fell in April while the number of residential properties sold dropped sharply on the year, adding weight to comments by the central bank’s deputy governor last week that new regulations on bank lending are starting to have an impact.

Data from the Real Estate Institute of New Zealand Monday showed the national median home price fell to 432,250 New Zealand dollars (US$371,735) in April from NZ$440,000 in March. On the year, however, the figure was up from NZ$390,500 in April 2013.

REINZ Chief Executive Helen O’Sullivan said the sharp fall in sales volumes impacted all regions, as well as Auckland and Christchurch–the scene of much of the recent price pressure.

“The number of sales in the sub-$400,000 category continue to fall faster than the market overall, suggesting that the LVR (loan to value) restrictions are continuing to have an impact on buyer intentions at the lower price points. The lift in the Official Cash Rate by 0.5% over the past two months is likely to have also had an effect,” Ms. O’Sullivan said.

I have noted before that it seems the Canterbury market is currently “catching its breath”. In Christchurch, despite a drop in sales volumes (487 in April cf. 608 in March), the city-wide median of $412,500 is only 1.3% on a month ago – and up an impressive 10% on last year. For sellers – the market is still in your favour, and with interest rates set to only increase this year, it may be better to act sooner rather than later!

Harcourts MarketWatch: January 2014

Market Watch

Christchurch Metro

January 2014

January 2013

Change

Total listings

360

417

-13.70%

New Auctions

117

110.5

5.90%

Property on Hand

1608

1594

0.90%

Written Sales

253

290

-12.80%

Average Sale Price

$463,814

$384,648

21%

Christchurch Metro Overview

The average house price in Christchurch is up 21% on last year and now sits at $463,814 – a clear indicator of a bullish market. Total listings are down, highlighting the problem that faces Christchurch while the rebuild slowly moves along – demand significantly outstrips supply.

Christchurch lost 10,000 houses on 22 February 2011 and a further 25,000 are seriously damaged. The Government estimates the need for 20,000-25,000 people to come into the city to carry out the $20-26 billion of rebuild work required. There is no doubt Christchurch will be facing an incredible housing shortage into the foreseeable future and prices and rents will continue to rise.

Understandably, the Reserve Bank’s loan-to-value restrictions have not affected the Christchurch market, which is driven by extraordinary circumstances.

Auction numbers continue to rise and now account for 32.5% of all listings. The competitive nature of the auction process is understood by vendors to be the best way to secure a top price.

Overall the property market in Christchurch is fast paced, with houses selling swiftly and for record prices. The high demand, low supply environment will continue for a long time yet and there will not be any significant drop in prices. Those looking to enter the property market would be wise to act sooner rather than later as there is still value to be had.

All Harcourts MarketWatch figures are current to the end of the reported month and are compared to the same month ended for the previous year. ‘Written Sales’ is defined by all sales brought to contract status, where ‘Settled Sales’ are the results of contracts completed at the close of the reported month. Written Sales are a snapshot of the market’s temperature while Settled Sales show what has happened in the previous month.

New year poised for more of the same

Picking up from where we left off pretty much sums up the mood of the market with more of the same, in fact I am comfortable predicting that the intensity will actually move up to the next gear this year.

Liz McDonald’s article ‘House prices soar past 2007 peak’ in The Weekend Press notes that the past year has seen house values rise in Christchurch by close to 13 per cent. Investing in Christchurch’s bricks and mortar really is a no-brainer – with a guaranteed appreciation rate in excess of 10 per cent, it sure beats any government share float!

Infographic December 2013 Continue reading

Back a winner with Christchurch real estate

Terror To LoveTerror to Love wasn’t the only one on a winning streak this past Canterbury Show Week. The latest stats from REINZ confirm a reoccurring story that we’ve seen for much of the year – house prices continue to rise, listings year to date (apart from the typical spring flurry) are in short supply, and homes are selling faster in Canterbury than in any other region.

Liz McDonald reports:

Canterbury-Westland’s median house price for October hit a record for the sixth time in a year and sales were up.

This was despite the Reserve Bank’s October 1 move to cool the housing market by restricting how much the main banks could lend out in low-deposit mortgages.

Institute chief Helen O’Sullivan says while there has been “heightened uncertainty” across the country about the impact of the changes, the full effect  on prices may not show up for months.

… While the median price for the city fell slightly from September to $395,500, the institute’s house price index, comparing sales of similar properties, put house inflation at almost 1 per cent for the month and 10.8 per cent for the year.

It’s been much the same story all year, and personally, having been involved in the real estate industry for the best part of quarter of a century, property has always remained a consistent winner. While it is important to consider the big picture, property generally doubles in value every 8 – 10 years even despite the down periods. I’m not sure that we can get a better winner than that! I don’t know about you, but I plan to continue to maintain a reasonable investment in real estate for some time yet.

At the coalface, we’re keeping ourselves very busy here at the Griff team with the ‘Turkey run’ to Christmas. We have quite the varied catalogue of properties coming on to the market over the next week or so, so be sure to watch this space…

Sales volumes ease nationally, Canterbury growth continues

Infographic

 

The New Zealand Herald reports a rise in median prices, but a slight dip in the number of sales:

Reserve Bank home-loan limits slowed house sales last month, but prices are still on the rise.

The seasonally adjusted number of house sales in October fell by 4.1 per cent compared with the same month last year, Real Estate Institute of New Zealand (REINZ) figures released today showed.

Unadjusted sales were up 2.1 per cent last month compared with a year ago and up 0.9 per cent compared with September, the institute said.

The Reserve Bank imposed loan-to-value ratio (LVR) restrictions early last month in an effort to cool the over-heated housing market.

Most first-time home buyers now require a 20 per cent deposit to qualify for a mortgage.

While the lending speed bumps had slowed the volume of houses sold, prices were still rising, REINZ said.

The national median price hit a new high last month of $407,525.

The median house price for October was 1.9 per cent above the previous record, the data showed.

Prices were 7.2 per cent higher than in October 2012.

Auckland, Canterbury-Westland and Waikato-Bay of Plenty reached median highs last month.

REINZ chief executive Helen O’Sullivan said sales volumes typically changed quicker than prices.

The full effect of the LVR restrictions on median house prices could take a few months to flow through as borrowers with pre-approved loans bought a house, she said.

It is still early days to gauge whether the Reserve Bank’s LVR restrictions will have a marked effect on the market, although many in the industry have reported a decline in open home attendance for entry-level properties. My preference is to consider a broader base (at least 3-6 months) of statistics to get a much more accurate picture of emerging trends in the marketplace. The tendency of the media to draw conclusions on the basis of one month’s stats is often not helpful in bringing reassurance and stability to any market.

As per last week’s comment, the buying public are enjoying a little more choice and a little less intensity, and maybe that is not such a bad thing – supply and demand has a significant balancing effect in any marketplace.