Property Statistics
Barfoot & Thompson reports strong September sales
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The month of September saw Barfoot & Thompson report total sales across the Auckland and Northland region of 917 residential properties. This was 64% increase on the month of September last year and interestingly 36% up on the month in 2007 when the market was entering the recessionary phase.
Seen in context this sales result is strong as it is only 13% down on the month of September 2006 when the market was by any measure very heated.
On a 3 month moving average basis as represented by the chart below the recent sales for the company are strong as measured against the prior 2 years, indicating as the report from Peter Thompson highlights that the spring traditional “bounce” is occurring. The yellow bars in the chart represent the months of September in each of the past 3 years.
In terms of pricing, the average price fell slightly (3%) from the August figure of $532,023 to the September average of $514,890. This average price is up 4% on September last year and 8% off the peak of the market in December of 2007.
The chart below tracks the past 3 years of average price and year-on-year variance and clearly shows the recent strengthening of prices. A situation that Peter Thompson sees as prices having stopped falling and at the same time not overheating.
The other component of the report was the details of new listings. A reported 1,466 new listings were made by Barfoot & Thompson in the month, up 12% on August. This increase very much reflects the total market picture detailed in the NZ Property Report for September published by realestate.co.nz. The total region of Auckland had 4,015 new listings added to the realestate.co.nz website in September up 15% on August and up 13% on September 2008.
Tags: Barfoot & Thompson, house sales
Barfoot & Thompson signal strong Auckland sales in August
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Barfoot & Thompson reported their August sales results showing a strong performance with sales of 830 sales and an average sale price of $532,023. Barfoot & Thompson are the largest real estate group to operate in the Auckland market and provide an early indicator to the likely performance for the country at large.
The sales as shown in the chart below have risen from the trough which perpetuated for much of the 12 months to February of this year when average monthly sales hovered around 550. Whilst this does represent a 50% year on year increase at 830 sales – the figure for August 2006 (936) and August 2007 (765) does provide some perspective.
In terms of average selling price the tracking of price in the region over the past 3 years shows the significant rise through the final year of inflationary pricing in late 2006 / early 2007 followed by the plateauing through the remainder of 2007 before prices began to fall from the peak of December 2007 when the average price reached $559,804.
The current price level of $532,023 represents a 5% fall from peak, somewhat of a recovery from the low point of March of this year when the fall from peak totaled 12%.
Tags: auckland, Barfoot & Thompson, property price, property sales
Where have all the houses gone?
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Alistair over at the Unconditional Blog has just released the May New Zealand Property Report which shows a drop in the number of new listings coming onto the market. Ross Brader from the Professionals notes that there are only 13 houses left for sale in Pt Chevalier and they normal turnover in that suburb is 15 a month.
“In Pt Chevalier right now there are less homes on the market than at any point in the last 6 years yet we currently have 33% more buyers registered than we had in 2008 – 775 currently registered in our system.”
Relating this back to the real world of actually looking for property we are seeing a large number of people looking for homes. The house pictured above is 5 Ryle Street in Freemans Bay, Auckland which had an open home this weekend. When we visited there was literally a traffic jam of people trying to get in and out of the house. I think we have found a window where some sellers are happy to take a realistic price and there are buyers out there willing to pay for quality properties. I still think there are some unrealistic expectations out there and for a real resurgence in the market those will have to come down but things are looking OK for those willing to buy and sell for the right price.
Buyer tip #1 – the best buyer is the most knowlegable
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The old adage of real estate was “location, location, location” – it is today better represented by “research, research, research”.
The best advice for a buyer is to be the most knowledgeable party in the decision making process, more knowledgeable than the vendor or the agent – quite a challenge!
To be knowledgeable use the best tool on the market today – the web. Research all you can about the market you are looking at. Be very specific as to the area you are interested in buying into so you can be the local expert.
Zoodle provides a massive amount of valuable information on your local suburb. It shows the information on the number of sales per month, the median price, the average “days on the market” (that is how long it is taking to sell property) as well as the number of listings on the market and how the interest in property in the suburb is going in regard to viewings on realestate.co.nz.
Take the time to identify the selection of properties you are interested in and keep a check on the how many other people are “watching them” – each property on realestate.co.nz has a tracking graph to show this information for the past 4 weeks – just click the link from the number of times the listing has been viewed at the top right of the listing page. This also shows you the origin by country of property watchers. Armed with this information you can be well informed as to the level of interest overall in the local market as well as details on key properties.
Naturally you will also be aware of the benefits of setting up an email alert or RSS feeds from realestate.co.nz of new listing that match your criteria – this service is part of “My Property” service on the website. Setting up these alerts ensures you are the first to be alerted immediately a new listing comes onto the market – this will not only highlight properties that may interest you but also highlight the trends in the number of new listing numbers coming onto the market.
Tags: buyer tips, research, web traffic
Buyer tip #2 – shop around
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There is a lot of property on the market – over the past 2 years as the market has progressively cooled the number of properties on the market as featured for sale on realestate.co.nz has grown steadily from around 48,000 to over 68,000. This means that based on the rate of property sales that the number of “months worth of stock” on the market has grown from around 5 months to well over 12 months.
The graph below shows this very clearly with the area in green representing the number of residential properties on the market over the past 2 years, whilst the red bars represent the number of sales per month falling from highs of over 10,000 to the current flat level of around 4,000 per month.
The website of realestate.co.nz represents the listings of over 95% of the listings of licensed real estate agents and is therefore an accurate bell-weather of the market. More properties being searched by fewer buyers means that you can and should shop around. It is important to clarify that the figures quoted here are an estimate of the number of properties on the market. As properties are often marketed by more than one agent the number of listings shown on the website will often be more due to this “multiple listings” which appear as duplicates of the same property.
In terms of advice – firstly don’t just look at new listings, have a look a little further down the page of listings on the search results – maybe for ones that have been on the market for a few months, there may be some hidden opportunities to approach the agent to discuss a property that has not been actively viewed in recent weeks. Remember that every property on the website is currently being managed by a licensed real estate agent and is therefore genuinely “on the market” to be sold. Agents earn commission when a property is sold and therefore properties are not added on a whim – that agent is only going to earn any income when the property sells.
Think about opening up your geographical range so you can find a range of optional properties that match your criteria – don’t forget that for any property on the market, Zoodle can tell you the in-zone schools which is so important.
Tags: inventory, months of stock, motnhly sales
Buyer tip #3 – there is never a perfect time to buy
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Or put another way – trying to play the market is not for the average home buyer.
If you really want to know there is a point in any cycle – a single transaction that is at the lowest point of a market cycle, that is the property everyone wants to buy, just as there is a single transaction that is the highest point of a market cycle, that is the property everyone wants to sell. However these facts emerge many months after the turning point of a cycle. If you are lucky enough to know these points better than another buyer then you have the luck to win Lotto week after week!
The important thing is to stand back from the graphs and the belief that any of us know when the downward stage of the graph will bottom out and turn into an increasing upward gradient. Instead ask yourself this simple question – “Will this house I am interested in buying” -
(1) suit your needs in 5 or 10 years time?
(2) will I be able to affordable the mortgage payments in 1 years time / 3 years time or even 10 years time; will projected mortgage rate increases (based on the low level of current rates) match my salary expectations in the future?
(3) do you think the selling price in 5 or 10 years time will be worth more than the mortgage you are taking on to buy the house today – with the benefits of mortgage repayment.
If the answer to these 3 questions is yes, yes, yes, then you are well positioned to enter the market – two out of three, you need to think carefully.
Tags: mortgage rates, propert cycles
Buyer tip #4 – it’s a buyers market – just not everywhere
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There is no single NZ real estate market.
There is a local market in a suburb made up of buyers and sellers who are endeavouring to match each other’s needs – into this market you are considering your entry so be wary of applying country wide trends to your local areas.
It is entirely possible that within today’s market where property prices have trended down by on average 4.4% in the past year (REINZ data Jan 09 year on year % change) you could well find that in a particular suburb at a particular price point the average price may actually be up by 5% or down by 20% – remember the figure of 4.4% price decline is made up of 3,706 properties selling in Jan 09 as matched to 5,186 properties selling in Jan 08.
The other consideration to appreciate is that with such extreme economic conditions a certain number of property sales are clearly distressed sales where the lender has foreclosed on the borrower in a mortgagee sale. The number of mortgagee listings on realestate.co.nz has grow significantly over the past 18 months as a result of these circumstances. These sales often are closed at prices below market average as the seller is not in these circumstances a “willing seller”. These sales which although representing a small percentage of all sales, never the less can effect the average price in the market.
The best judge of property price movements are the local sales reports available on Zoodle – for just $24.95 you get a comprehensive assessment of 20 recent local sales from the local market – just select the property you are interested in and buy the Local Sales Report to enable you to make an informed decision about those 20 local sales – take a walk around that neighbourhood and look at those properties or better still check out each one on Zoodle form the comfort of your armchair.
Tags: foreclosure, local sales, mortgagee
Buyer tip #5 – a home represents far more than a financial investment
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The media is full of commentary by amateur and professional investment advisers applying pure financial measures to property prices.
They are detailing yield levels and return on investment analysis. These financial models are appropriate for pure financial investments such as shares or bonds, where these investments are expected to perform in terms of paying interest or a dividend (income) or providing a profitable return (capital growth).
Whilst valid from an arithmetic point of view the reality is that the most important thing for most purchasers of a property is the pleasure and sense of confidence that comes from owning your own home. This is the emotional connection that is applied to property purchase and it certainly needs to be carefully balanced by financial logic in the buying process.
Clearly the market has a proportion of investment properties which landlords buy with the express intention of renting out for commercial gain through income and ideally capital growth. Whilst their judgment of property price may be more based on yield, as a home for your family and a long term savings programme a house may well mean more to you and that is what drives the greatest proportion of the property market. As ever it is important not to buy beyond your means and to make sure your capability to pay for the mortgage can be maintained should mortgage rates rise or should your personal circumstances in terms of employment or family considerations change.
Most people buy with an intention to hold on and improve (or at least maintain) a property. In that time they cannot and should not apportion a value to the intangibles of security, social and emotional value a home provides. These are the factors that drive people to move to new streets and seek out new school zones or lifestyle choices. As most people sell their existing home and buy another homes usually within a 3 – 6 month window the factor of price movements are less likely to affect your individual purchase as you are operating in a like-for-like market.
The losers (and likewise sometimes the gainers) in the property markets are those that step off the property market and move to the renting market with all the consequential emotional and financial effects that can have on you and your fmily.
Tags: capital gain, investment property, mortgage
Property cycles – how NZ stacks up against the UK
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Much comment has been made as to the tracking of the NZ property market as compared to other markets most notably the US and the UK. Whilst comparisons to the US market have been made in the past the reality is there are some fundamental differences (some very well observed comment was make to this effect by Bernard Hickey on the Rates blog as part of his traveling blog series made during his road trip over the new year across the great wasteland of the USA). It is for this reason that this analysis here tracks the NZ to the UK market to highlight past trends and sets some perspective of forecasting the future.
The chosen data sources are the objective data from the Real Estate Institute of NZ Median Price (source data from 1992) and the UK Halifax House Price Index (source data from 1984). I have analysed these two markets over the key period of the last 10 years to look to see the similarities and differences in the index of property price appreciation and then decline.
Starting with the boom times and the priming of the bubble. Based on an index of Jan 2000 the graph below tracks the indexed price appreciation of property through until the peak of the market in 2007. The UK peaked in August 2007 whilst NZ lasted until November 2007.
Clearly over this explosive 7 year period property prices appreciated in the UK by over 140% pushing the median from £83,175 to £201,081. During the same time period the NZ median price appreciated from $170,000 to the peak of $352,000 an increase of 107%.
Given the slightly different months of market peak I have looked at the subsequent decline in prices on a monthy basis where month 1 is the first month post-peak. The data utilises the January 2009 data from both sources in the compilation of the latest trend. The % decline is measured as % decline from peak price month.
The tracking of the UK property price decline in red clearly shows the current property price level off 20% from the peak as that market heads towards 18 months since the peak market price month. For NZ the decline measured utilising the latest January 2009 median price of $325,000 shows a 7.7% decline from the peak of just 14 months ago. The UK price for January did show a single month improvement, however as the Halifax report states “It is always important not to place too much weight on any one month’s figures. Historically, house prices have not moved in the same direction month after month even during a pronounced downturn”.
The desire whenever compiling such data is to see if prior history can provide any indicator of future trends. In the case of this data set, the NZ market over the period of 1992 to date does not include another period of such sustained and significant appreciation. However the UK market data does cover a very similar period during the years 1983 to 1989 which showed for 6 years a sustained and significant appreciation of prices of the order of 128% over that period.
Mapping the 6 years prior to the peak UK market in 1989 against the 6 years that followed could provide some valuable insight. The graph below presents this data represented by the blue line which tracks that 12 year period. Overlayed on the same axis is both the UK (red line) and NZ (green line) property market for the 6 years prior to the peak in 2007 and then the subsequent 14 to 17 months following that peak.
This graph certainly shows the extent of the fundamental difference in the scale of decline in UK prices following the peak in 2007 – the 1980′s bubble and correction looks relatively tame in comparison. As for NZ; to date the scale of the correction does not show as yet such a significant decline now into its 14th month since peak pricing. The remainder of this year will provide a clearly picture for how these 2 markets will trend in the longer term.
Tags: Halifax, property prices, REINZ, UK
Property prices – key price segments showing activity
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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.
Tags: property prices, property sales, REINZ
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