Property data - do we really have what we need?
The question might be better phrased as do we have what we want or what we need? The fact is we are well served with property data in NZ
as compared to some other countries.
We get monthly reports on sales volumes and median prices as well as valuations and listings volumes. Each month the data is published across all media and a regular flow of analysis is applied to give us a sense of what it all means. Economists and commentators (myself included) provide our take on the data and by the 10th day of the month we are back to other property stories until the next month comes around.
Just this week we saw a new quarterly REINZ/Fairfax media report on suburb level property prices and sales - headlined as "property news you can use" . Valuable information, but nothing new. The core data is what the Institute has been collecting and squirreling away for years.
Scanning the wider property media from around the world I am beginning to think we are fooling ourselves; as we are actually only seeing a very thin layer of data. The property market in NZ at residential level is worth $34 billion and supports over 9,000 salespeople who charge out a collective $1+ billion in fees each year. Should we not expect greater insight from the real estate industry?
Let me hypothesize some scenarios of property data that I think would be valuable to all and is not available at this time:
1. What is the percentage of residential property buyers that are sold to first-time homebuyers, typically what are they buying, where and for how much; how has this changed over the years?
2. How many of the properties sold each year are sold to people within a 5km radius of where they currently live and how many are sold to people who move from another part of the country or from overseas; if from overseas, then from which country, are they returning kiwi’s or new immigrants?
3. What is the median price for 3 bedroom homes in a suburb as opposed to a studio apartment in that suburb and how have these prices changed over the years?
4. How many sales in Northland last year were of holiday homes (as second homes) and what was the median price and how does that compare to the past 5 years?
5. How many properties in Auckland are bought as investment properties and how many of these are managed privately as opposed to being managed by a property manager?
6. Over a 3 year period approximately x% of properties are sold to a new owner. What is the true value increase of these properties in total, and also what change in value were the result of improvements or renovation and how much for properties that were not subjected to a renovation?
7. What percentage of property purchases were made without a mortgage and of those purchased with a mortgage what is the current mortgage to equity ratio?
8. What is the median advertising spend by price range of property by region of the country?
Such richer data would provide so much more insight and assist consumers, economists and many other businesses to better plan and offer services around the buying and selling process.
This data outlined above is not beyond the bounds of capability. Such data could be captured by real estate agents or the Real Estate Institute in its capacity as the organization representing the industry and its professional practioneers.
What would be needed would be a more comprehensive data collection system adopted by the industry. A report could be required as a mandatory part of the reporting for every sale completed by a real estate agent. Currently all an agent has to do is identify the address of the property, when it sold and for how much, when they listed the property and how many bedrooms etc. Much of this data is duplicate for the data held by Realestate.co.nz (a subsidiary of REINZ) anyway and therefore should share data
A new more comprehensive reporting system could capture all the necessary data identified above. An online system would intelligently align questions to known data sets regarding the property so for example questions for a property listed on Realestate.co.nz as a lifestyle property would be tailored to that type of property, and would pre-populate with historical sales data, listing information and analysis based on property identification.
In addition the Real Estate Institute in its role of upholding professional standards could implement a consumer survey for all completed sales which could be sent via agents to vendors and could collect information to supplement that collected by agents. It could survey professional standards and seek to provide the industry and the consumer with feedback and insight as to the professional services offered by real estate agents.
I believe the real estate industry needs to be more transparent and accountable for the services it offers and also to be a more valued provider of rich information and trend analysis. The challenge is once again made to the industry at large and the Institute in particular to step up and adopt some of these proposals.