Property prices – key price segments showing activity

The Real Estate Institute (REINZ) has been providing sales data on a monthly basis by price band for over 5 years now and this segmentation is helpful to see where there is activity within the overall market.

The chart below shows on a quarterly basis the proportion of all sales by price band in 4 categories (the $1m+ band was only instigated mid way through 2005).

Clearly with the rise in median price over the 5 year period from$210,000 to $328,500 the proportion of property sales falling into the higher price brackets have increased. Sub $400,000 properties represented over 86% of all sales 5 years ago whereas in 2008 they represented less than 65%.

What is very noticable from the chart is the fact that over the past year the proportion of property sales in the sub $400,000 bracket has reversed its decline and has actually been growing. To demonstrate this a little better the graph below explodes these price band groups to highlight in the green line against the left hand axis the monthly tracking of sub $400,000 property sales as a proportion of all sales. Here the % of all sales for this sub $400,000 category reached a bottom point of just over 60% before rising to over 65% in late 2008.

Equally noticable is the plateauing of the proportion of sales in the intermediary price bands between $400,000 and $1m. The relatively small segment of properties over $1m has remained fairly stable at around 2.7% of all sales over this period.

The timing of these adjustments as highlighted on the graph really hit in late Autumn of 2007 and as the graph below shows this date period reflects the start of the fall off in overall monthly sales of property.

So what can be deduced from this analysis?

The transaction activity in what has been a very stagnant market for the majority of 2008 has been focussed in a growing proportion around sub $400,000 properties, whilst the price brackets upwards of $400,000 has gone exceptionally quiet indicating a combination of a lack of buyers in this sector matched with sellers either unwilling to match the market price of owners or owners not keen to contemplate selling in what has contined to be a buyers market. Equally the activity in this lowest price bracket could reflect a growing liquidity of investment properties within the private landord market.