The NZ Property Cycle - 4 years to June 2013

by Alistair Helm in , ,


The Properazzi Property Dashboard portrays the barometer of the regional property market which is very firmly in favour of sellers

The Properazzi Property Dashboard portrays the barometer of the regional property market which is very firmly in favour of sellers

Property markets move in cycles. The current market is firmly established as a sellers market. This current state is widening, in the sense that the total market when seen by region is gradually migrating in the direction of more and  more favouring sellers. 

In order to present this analysis of the market I have created a series of 4 charts which show the picture of the NZ property market by region for each of the past 4 years 2010 - 2013. I have used the measure of inventory as presented by the NZ Property Report from Realestate.co.nz which each month assesses the market in each region measuring the available inventory of property on the market and dividing it by the average weekly sales for the past 3 months using the REINZ sales figures. This computation generates an inventory; not as an absolute number, but as an equivalent stock in number of weeks based on the current rate-of-sale.  

I very much favour this approach as it reflect the key driver of the property market which is supply matched to demand. As sales increase and inventory is slow to respond, as has been the case for the past two years the inventory measured in the number of weeks of equivalent sales falls sharply.

These monthly statistics of available inventory drive the Property Dashboard which is presented by Properazzi each month in the form of a barometer of the market visually showing the degree to which each region of the country is experiencing a buyers or sellers market. 

The four charts presented below present the inventory at June 2010 / June 2011 / June 2012 and June 2013 and clearly show the trend. The trend which over the 4 years has seen a situation where in 2010  4 years ago, all but 4 of the 19 regions were in a balanced or buyers market to where today in 2013 only four regions are in a balanced market with none favouring buyers and the majority in a moderate or extreme sellers market.

 

 

NZ regional inventory cht June 2010.png
NZ regional inventory cht June 2011.png
NZ regional inventory cht June 2012.png
NZ regional inventory cht June 2013.png

The Property Dashboard

by Alistair Helm in


Dashboard guage Stock_000013690792XSmall.jpg

Understanding the property market is not complicated. It is however confusing; as it is rife with data - median price / valuation / inventory / asking price / CV / GV / stratified price / truncated price / affordability index / sales volumes?

No surprise that all I ever hear from people is - "how can I make sense of all this data?"

I have studied the property market for more than 6 years and I believe there should be a simple indicator - a simple picture that, like a dashboard indicator helps you see what the market looks like today. 

That is why I have developed The Property Dashboard which provides a visual cue as to the state of the market. The pointer reflects in which of 3 states the market is in - a balanced market, a sellers market or a buyers market.

The dashboard indicator shows a single number which is the available number of properties on the market for sale relative to the number of sales measured in number of weeks of supply. What determines the position of the indicator on the dashboard is dictated by calculations based on over 5 years of data sourced from REINZ and Realestate.co.nz. It is the relative position of the indicator to the segments in green, orange and red that are key to understanding the state of the market.

What about price I hear you ask? The market price of property is a 'backward looking indicator" which is the result of a buyers market or a sellers market.

When there are too many properties on the market relative to sales the market favours buyers, these smart buyers negotiate hard and drive prices down. The opposite situation in a sellers market is where demand from buyers is strong and the supply of properties on the market is in short supply, this situation leads to buyers aggressively competing to push up property prices.

Each month the Property Dashboard will be updated to reflect the most current data. The Property Dashboard has its own header on the Properazzi website - easy to find, easy to interpret. Data will be updated around the first week of the month and accompanied by a monthly summary. The detailed dashboard comprises an individual indicator for each of the 19 regions of the country as well as an indicator for the whole of NZ.