Quarterly Property Review for NZ outside of Auckland - Q2 2018

by Alistair Helm in


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As I have commented recently, I've made a conscious decision to cease to produce data analysis on what is seen as the "NZ Property Market" - the fact is this aggregation is really no longer as relevant, given how distinct the property market is between Auckland the rest of the country. So this is the first of what will be a quarterly report for the aggregation of property data for areas outside of Auckland, complementing the separate report for the Auckland market.

The brief overview of the property market outside of Auckland based on data up to and including July, shows a relatively healthy market with good clearance rate, sales volumes fairly static at a strong level, with prices continuing to rise with mid single digit year-on-year growth.


Volume Sales

From a volume sales perspective - annualised volumes are steady at around 52,000, a level that has been consistent for around 9 months. The past 4 months has seen a very slight increase but not enough to yet call it a upturn. This level is down 16% from the last peak of sales which was close to 2 years ago, far less than the fall seen in the Auckland market which was 37% from peak.

NZ property sales excluding Auckland 10 yrs to Jul 2018

When seen as annual variances in monthly sales, the picture shows modest rises in sales comparing each month with the same month in prior year with barely a perceptible trend up or down.

Property sales for NZ exc Auckland 2000 to Jul 2018 variance yr on yr

Pricing

In terms of pricing the median sales price over the the past quarter has marked time at the $455,000 level. Back in March the median price peaked at $460,000 and subsequently it has bounced around that level but not as yet exceeded it. The chart below tracks the year-on-year variance of monthly median sale prices over the past two decades, showing as it does how consistent property price appreciation has been over this extended period.

NZ median sale price property excluding Auckland 2000 to Jul 2018

Clearance Rate

I am very keen on this relatively new metric of the clearance rate as a tracking tool for the trends in the market. It is measured as the rate of sales against the rate of new listings - think of it as the available stock in a warehouse - if your clearance rate is below 50% then you will suffer the pressure of overstock and will need to adjust prices down to clear inventory. The opposite with a clearance rate of over 50% indicates strong demand which can create price inflation.

As you will see from the chart below the clearance rate for NZ properties outside of Auckland is edging up, as it has been for most of this year so far. The point about clearance rate is that it is all about relative market activity so whilst sales are almost static this is matched to static new listings, within this market dynamic, the properties being listed are being sold at an ever increasing rate; and as the chart shows clearance rate tracks to a pretty close correlation to price inflation. It is also worth comparing the clearance rate outside of Auckland with that in Auckland. Auckland clearance rate is currently just 55% as compared to outside of Auckland at 68%.

Clearance rate of NZ property excluding Auckland tracked with median price movement 2008 to Jul 2018
 


I have added a modified version of the clearance chart below prompted by a comment from John - he was questioning the uneven scale range between price movement and clearance rate. I have used the 50% clearance rate as the midpoint and then adjusted the upper level to +25 percentage points as per the price movement and equally -15 percentage points to the lower level.

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