A couple of news stories today prompted me to call for the access to better information on buyers in the property market to dispel what amount to pure speculation on matters such as the extent of overseas buyers buying investment properties in NZ.
The first such article in the National Business Review was by Jason Krupp of the New Zealand Initiative titled "Housing needs a flaming brand!" and then Bernard Hickey weighed in on the same topic "An ugly housing vacuum" - both articles decry the lack of hard data. Both good articles, however both bemoan the lack of good data on which to make critical decisions.
This desire to seek hard statistics resonates so well with me and it is something that I have long argued for. However I do not advocate the proposal from Jason that we should let the demands of a political organisation spearhead this information request, nor as Bernard advocates seek the input of the Reserve Bank. No, the request should be made to the organisation best placed to collate such information, yet which seem so oblivious to the value it would generate, I speak of the Real Estate Institute.
The current BNZ / REINZ survey is an embarrassment in my opinion. Whilst well intentioned and clearly a source of some data, it is weak. Look at the facts. The email survey is sent to 10,000 real estate agents and the response varies between 300 and 600 per month - that's barely 5% of the agents. The key question has to be asked why is this and who is responding? - is this survey completed by active successful agents or those simply with time on their hands?
The Real Estate Institute currently collects monthly sales data for every property sold in NZ by a licensed agent who works for a licensee company who is a member of REINZ (estimated to be 95+% of all licensees). Sadly the data set required in this current process is woeful at best, comprising:
- Property Address
- Property Type
- Number of Bedrooms
- Sale Price
- Sale date
- Listed date
What is also appalling in my opinion, is that this data is not aligned to the original listing data which is submitted when the property goes on the market to the property portals, especially Realestate.co.nz in which REINZ holds a 50% stake.
An integration of listing and sales data into a single database would avoid duplication and provide rich data. It has been a discussion point within the industry for many years (over 3 years to my knowledge). Such a database could open up new data sets such as:
1. How long property really takes to sell - the current "days on the market" stat produced by REINZ is actually only a reflection of how long it took to sell the property by the current selling agent, bearing no relevance to when the property was first marketed which may have involved a number of agents before its eventual sale
2. Asking price to eventual sale price index. All properties require an inouted price range to activate property portals search price function and this drives the asking price data
3. Asking price modifications during the period on the market
4. Property marketing methodology analysis - auction clearance rate / passed-in action to subsequent sale data
5. Buyer interest measured by page views & enquiry emails to sales time and price performance
6. Property marketing to sales performance analysis
7. Inventory data at suburb / school zone level
As well as this potentially beneficial data integration the Real Estate could instigate an email survey in a confidential manner (organised by a 3rd party company) based on the vendor's email supplied by the selling agent. In this survey the data that is so urgently required could be sought:
1. Profile of buyer - demographic
2. Profile of buyer - 1st home / investment / retirement
3. Reason for purchase
4. Financial arrangements
5. Prior address - indications of migration data
6. NZ national living in NZ or international investor / ex-pat kiwi
In addition to this valuable data, by the use of a confidential 3rd party company, the survey could also evaluate in an objective manner the performance of the agent as is done by some real estate associations in the US, notably the Houston Association of Realtors.
By effectively distancing this survey from the selling agent (they would not be the best people to collect data) the data confidentiality could be ensured and the aggregated data anonymised which would be of huge benefit.
In my opinion these incremental data sets would serve to add value to better understand the property market and allow economic issues to be discussed in an objective manner rather than be hijacked by political organisations. Added to which this rich data would be of great value to the Real Estate Institute in building credibility in the industry and the organisation.