So.. should I wait to list in the Spring?

by Alistair Helm in


4 Seasons trees iStock_000007235396XSmall.jpg

Sitting in a recent sales meeting of our local office the other day, the discussion came around to the pipeline of forthcoming listings. The one consistent comment emerging from around the table was the client desire to "wait for Spring". I have long heard this view that Spring is the best time to sell, but is it really?

Spring may well be the busiest time for new listings, but is such a cluttered and contested market the best time to grab and fight for attention?

This question and the data to support the opposite view is something I have written about in the past, but I thought it was about time to revisit this matter for the benefit of buyers, sellers and my new colleagues in this real estate industry.

From a statistical point of view the way to assess the seasonality of the property market is to create a picture of weighted average sales for each month, based on the historical sales by month. This is the approach I have taken in the past. However when updating my spreadsheet it did strike me that this approach was somewhat "rough & ready". After all, months have different number of days, especially when you allow for the major public holidays. So I factored this in to created a weighted average sales per day for each month and then expressed this in the chart below as to the variance that each month represents as compared to a "normal month".

This charts shows that the most active month of the year in terms of sales is March with January the least active. October is the month which could best be described as 'average'. The overall trend is that the most active sales period is February to May. The winter months through to September are quiet and then November comes storming back before December sees sales tail off. Nothing surprising in this I would have to say. As a note this data is total NZ sales from the full data set of Real Estate Institute statistics from 1992 to 2017.

In doing this statistical analysis, as very often happens I questioned the data to see if once you broke up the data for the full 25 years into separate 5 year periods, if this pattern has changed in any significant way?

This then is the same analysis but showing each of the five 5 year periods from 1992 to 2016.

This analysis I find very interesting (but maybe I am the only one!) - the key months for me are January, May, July and December as these to my mind are demonstrating a valid statistical trend.

January is very clearly becoming a much quieter month. In the most recent 5 year period (2012-216), a period in which sales have been buoyant, it has been close to 30% quieter than a typical average month. Why? Well it could be a factor of lifestyle and people really wanting to enjoy summer and not worry about buying or selling a property. However I believe the real estate industry has begun to see the need to manage their business better, and so establish campaigns that culminate with sales pre-Christmas or wait until the end of January and in so doing leave January clear for vacation. 

The month of May is very clearly becoming a more active month with a successive shift from being the 5th quietest month back in the early 90's to being the 3rd most active month of the year in most recent times. Why? I suspect that the earlier statement about how January has become less active has shifted the summer marketing campaign period well into May.

July has like May, become a more active month, however it is still the 3rd quietest month of the year.

Finally December has become less quiet, this coupled with a slight lessening of the activity in October would possibly indicate that the traditional Spring market activity is getting later and the lead up to Christmas is as active as the main month of November, especially as it lends itself a settlement and house move in the best of the summer days in the new year. 

 

Back to the matter of is Spring the best time to sell?

 

To really assess the best time to sell, you need to look at both the listings and sales by month to picture the seasonality. Statistics for listings only go back to 2007 via Realestate.co.nz and their NZ Property Report, so I have adapted the seasonality of sales chart to measure the past 11 years. So here are the charts based on this 11 year period for sales and listings.

These two charts have the same identical axis scale of -25% to +25% and the first thing that strikes you is how much more volatile listings are in terms of seasonality. There are only 5 months of the year when listings are more than average (Feb/Mar/Apr/Oct/Nov) with 7 below average, whereas sales are split 50/50. For sales there are only the two months of January and March when the variance to the average is greater than 10%, whereas for listings there are only 3 months when the variance is less than 10%.

A better way to view this mirroring of supply and demand is to line up the two sets of data on a single chart.

This is the chart that best shows the challenge of when to list a property for sale. If you hold by the adage of being a 'big fish in a small pond' then the best time to list is during the winter when listings drop off far more than sales drop off.

If you wanted to call a single month then December would be the winner. The differential between listings and sales is 16 percentage points, closely followed by May at 13 percentage points.

The worst month to list based on this analysis is October where the differential is 17 percentage points. This would therefore seem to completely quash the notion that the best time to sell is the Spring, certainly a deluge of new listings hit the market in the Spring but based on the latest 11 years of NZ sales data, September and October are actually quiet sals months with November being the single active month of the Spring.