Posts Tagged ‘property sales’
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%.
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.
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.
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