Property sales likely to pick up in 2009
A 50% increase in property sales is likely to be seen in the next few years as the market climbs out from the lowest relative point of the past two decades.
Over this period since the early 90′s we have seen in NZ a 29% increase in the housing stock; adding an incremental 345,000 new homes taking the total to over 1.5 million). This steady growth as a reflection of an active level of migration puts into stark perspective the latest property sales figures.
For whilst the total sales of 2008 at 56,000 was the lowest level since 1992 (closely followed by 1992 at 63,270 and 2000 at 65,332) when seen as a percentage of the housing stock the level of true sales is shown to be a very serious low point for the industry. The chart below shows sales as a % of dwellings each year (the red line is the average level over the period).
The sales in 2008 represented just 3.7% of all dwellings, that is equivalent to just one house in every 27 being sold, or put another way means that on average based on these sales people are moving house less frequently – over the past 3 years that average has moved from 7 years to closer to 10 years.
Now clearly the factor behind the sharp fall in sales is not a cultural shift of lifestyle – it is a function of economic conditions, the market has frozen over the past 12 – 18 months as uncertainty over property prices, access to credit and security of income have come to impact the psyche of property buyers.
At some stage some of these factors will ease and with that will come an improvement in the liquidity of the property market. This will happen in 2009 as the cultural change of property moving has not fundamentally changed and now more than ever an active proportion of the population are looking to move for all manner of reasons. When the right conditions eventuate then the sales will begin to pick up with the percentage of dwelling selling returning towards the average of the past decade of around 6% which equates to around 90,000 sales, a 50% increase on this year’s total.