Wellington Market Update
The latest Property Pulse reports are out from realestate.co.nz. I always find it interesting to check out these data reports, and compare the “hard facts” with my “on the ground” experience in the trenches, here in the Wellington marketplace.
Here is the summary data for the Wellington region, for the month of May 2012 (click HERE for a larger image):
Let’s have a look at the individual numbers one-by-one.
Property sales
At 661 sales for the month of May, this was a increase of 23% over the same month last year. This is a considerable increase. However, looking at the previous two months, March and April saw very similar sales volumes compared to last year. So is the increase in volume during May a one-off, or is it a trend? I believe volume of sales for the past 12 months are higher than the previous 12 months, so I think there is an overall trend, although the data from month to month can of course vary considerably. In my own experience, there has certainly been more demand over the past 9 months than throughout the rest of 2010 and 2011, when demand was more anaemic.
Inventory
To me, this is the best single indicator of the state of the market. At 25.3 weeks worth of stock on the market in May, Wellington’s inventory of property for sale is steadily rising again. In 2011 it peaked at approximately 29 weeks before heading down again towards the end of the year. Since then, it has floated around 20-22 weeks, compared to a long term average of around 22-23 weeks, meaning the market was fairly balanced between buyers and sellers, or slightly in vendors favour, compared to the long term average. But to me it felt like there were actually two markets:
- Good quality property – well located, decent sun, well maintained property. This type of property was well under-supplied compared to levels of demand. Consequently, open home numbers were huge, auction clearance rates were high, and prices were firm. Vendors in this category were in control.
- Poor quality property – badly located, poor sun, difficult access/parking, compliance issues, cladding concerns – these properties have remained very stick indeed, sometimes taking long periods of time to sell. Hence the demand / supply balance remains in favour of buyers in this sector of the market. This represents an opportunity for those buyers who are able to resolve some issues, as many buyers are not willing to take such risks.
So it is interesting to see inventory on the way up again, meaning the market is moving gently back in favour of buyers. The next few winter months will be interesting, as new stock coming to he market tends to slow down in winter.
Stratified median house price
What can I say – prices are stable. Although volumes are increasing, indicating more confidence from buyers, this is not yet translating into higher prices. Buyers are still being very very sensible, making sure they are not overpaying for property. This is consistent with my experience – buyers are out there, but they are staying very cool indeed. Prices will continue to go sideways until the government indicate and end to job losses and a focus on growth. In my opinion.
Number of new listings
The past couple of months have seen an increase in new stock coming to the market compared to last year. This may indicate some confidence on vendors’ behalf that houses are more saleable now, which I agree with, subject to quality considerations. If we continue to get more stock, it may soften the market and put buyers back in control.
Asking price of new listings
Gently increasing asking prices again may indicate increasing confidence on behalf of vendors. Slight decreases in asking prices in the past few months may also have contributed to the increased levels of sales recently – vendors being a little more realistic. No great insights here.
Summary
The market remains relatively balanced, with some signs that buyers may once again be starting to have the upper hand. The exception, as usual, is in relation to good quality stock. If you have good property, it will always be in demand. Then it is just a question of what price you will get for it. This, of course, depends on many other factors, and I shall blog about that in another post later this week.
Feel free to be in touch regarding anything property.
Adam Cockburn – Wellington Real Estate Agent – 021 409 637
June 19 2012 12:22 pm | Uncategorized