We still know so little about overseas buyers of NZ property

by Alistair Helm in , ,


This week we have seen two supposedly insightful pieces of data helping to provide insight to the extent of international buyering of NZ property - one from Labour and the other from National. Irrespective of the validity of the data (I'll come to that in a minute) it clearly shows the fear and/or uncertainty surrounding the extent of international buyers' activity in the NZ property market. Certainly from a political perspective at least.

The first set of data released was from Treasury analysis of IRD data into tax returns filed by rental property owners. The data showed that from amongst 200,000 such tax returns around 12% (24,000) were from non-residents.

This data is certainly robust as there's somewhere around 400,000 privately held rental properties in NZ - allowing for multiple ownership this would cover most of the tax records. However the question has to be asked - what relevance has this data?

Included in this total of 24,000 would certainly be ex-pat kiwis with homes or investment properties here in NZ, and with the overseas ex-pat community somewhere close to a million people by all accounts, this group could account for all of it. Also the data provides no insight into the changes in the make up of this group of the years and thereby any inference of proportion of sales. The only trend analysis (Figure 1) shows that this segment had not actually grown significantly over the past 15 years during which time the NZ resident ownership base grew from 110,000 to 180,000 whilst the non-resident (as well as "unknown" whom the analysts suspect are likely to be non-resident) actually fell from around 28,000 to 24,000. 

The second set of data released by Labour's Housing Spokesman Phil Twyford presented the statement that based on data from a Chinese real estate website New Zealand is the 5th most popular place Chinese buyers look to purchase residential property behind the US, Australia, Canada and the UK.

The website to which the statement refers is SouFun - the biggest property website in the world, whilst not publishing traffic figures to its site, it is a listed company on the NYSE generating EBIDTA of US$360m on revenues of US$640m - this is a significant company operating in a massive real estate market. A market with annual transactions in the multi-millions of properties.

However whilst the audience and presence of the website is enormous in domestic Chinese terms, the capacity of it to attract an audience to NZ listings is tiny - no correct that microscopic.

In total they host probably somewhere over 4 million properties for sale across China together with a tiny add-on of around 35,000 listings from outside China. Within that 35,000 international listings there are 23 NZ listings - yes 23, check them out.

Many real estate websites around the world host international listings. The most significant of which is probably the UK site Rightmove which hosts over 125,000 international listings from more than 65 countries. Rightmove hosts 3,476 NZ listings which would equate to over 8% of all NZ property.

The fact is that the SouFun international section of the site is not representative of the true listing stock of any country it showcases. The closest it comes is actually Australia where it hosts over 6,000 listings - yet that represents less than 3% of the more than 230,000 listings of Australian property on the market today. For NZ there are 42,751 properties for sale at this time across the country and SouFun showcases 23 of them - less than one tenth of one percent.

It is therefore at best misleading and more likely totally irrelevant to showcase this data as any form of indication of true Chinese interest in acquiring NZ properties. 

Having said that there is no doubt we still need to find away to collect and analyse the data of property transactions - something I seem to be constantly championing - is anyone listening?


Barfoot & Thompson - the powerhouse behind the Auckland property market

by Alistair Helm in


I admire and respect Barfoot & Thompson for many reasons, but most of all because they take a professional and open approach to data.

On their site they publish facts. They share valuable insight into the property market. You can easily see how many properties they sold in a month, by price range, type and location. They also provide rental data as one of the leading property management companies.

This insight into their business should be celebrated, not so much for what it says about the company, as what it does to help us better understand the property market in Auckland - the powerhouse of the NZ economy and the hotbed of discussion of the property market.

Their ability to share openly their sales performance is a lot to do I suspect, with the family ownership; thereby allowing the directors to make the decisions that they believe are in the best interests of their employees, their self-employed real estate agent contractors and their wider community, as well of course of their business.

The Barfoot & Thompson business is huge. In 2013 they sold around 4 in every 10 properties in Auckland. A total of 13,123 transactions with a total transaction value of $8.5 billion.

2014 has so far been an even better year for them with sales in March exceeding a value of $1 billion in a month - a record very quietly celebrated internally I am sure, a staggering success. In March their total sales of 1,392 properties equated to 19% of all properties sold in NZ and they only operate in Auckland! (& Northland) although their data is based on Auckland.

 

Their success over the past couple of years is a testament to a classic marketing strategy I remember hearing in my early years in marketing. Increase your marketing investment in the downturn period of the economic cycle - just when your competitors are retrenching to save costs and secure shareholder dividends, that is when the smart company invests. As the economy improves as it has done in the past 3 years, then your investment pays off as your brand is well established with strong emotional triggers to ride the economy upwards.

Barfoot & Thompson are experts at emotional triggers being passionate supporters in the community - whether it be sporting, the arts, charities and of course their support of Starship - they wear their heart on their sleeve and back it up with resources to invest back into the community.

Their business model is smart - do what other competitors do, but makes your presence felt. They charge a commission rate just less than the competitors - not so much to be seen as a discounter but enough to provide a point of difference and a sense of being with the community. They invest in their physical presence. They have more offices than any other brand in the region - over 60 offices, so there is a presence on every high street in the region. They invest in people and they support them, offering salaried apprenticeship scheme to get people into the industry. They invest in brand marketing - you don't have to travel far to see a billboard or the back of a bus to get that recall of the brand.

All this investment is paying off, their market share in the Auckland market is growing, topping 46% in March alone to deliver a 12 month average of 42% up from 38% coming out of the recession in 2011. Almost all of this growth undertaken without buying up other franchise operations or building new offices (bar a very few exceptions) very much unlike how their competitors operate.

Barfoot & Thompson also deliver higher metrics than the other franchise groups in the country based on a per office or per agent basis.

They achieve almost twice the rate of sales per office per annum as their main competitors and deliver a higher gross transaction value per agent.

They are also innovative being the only real estate company to release an iPad app in NZ - an app that in my opinion is the best user experience for property viewing of any of the apps on the app store at this time - its only weakness being the range of listings, limited to just their own!

Returning to my opening remarks, the thing I most admire from the company is their publication of data, at a time when we need greater insight into the property market to assist us to make better informed decisions as to the state and trends in the market I am pleased we have such a forward thinking company in our leading city.


Are we losing access to vital property data?

by Alistair Helm in


Access to data denied shutterstock_122234134.jpg.png

I feel like the lifeblood for the analysis of the property market is being drained from me. I have in the past commented as to how fortunate we are in NZ to have such rich property data, how timely it is and how openly accessible it is.

Sadly I now have to report that the core custodians of property information are heading down a path – either collectively or independently to close off access to such valuable data.

First we had the proposal by Property IQ to acquire Terralink. This is now in the hands of the Commerce Commission who I am confident will find that this acquisition would seriously remove competition in respect to consumer property information – for a start it would be the death of Zoodle as Property IQ would strengthen the dominance and profitability of QV as the only place where you could get as a member of the public, historical sales data and estimated property valuations. The decision is due from the Commerce Commission on the 11th October so I will await that notice with great interest. Out of interest the original date for the decision was the 13th September, this has been extended - could be that the CC team is looking closer into the issue or maybe their overall workload is holding them up?

Following that potential blow I now see that the Real Estate Institute (REINZ) is quietly closing off more and more data that was at one time publicly available for free.

Firstly they removed the downloadable spreadsheet for the Stratified House Price Index which provided historical monthly median and stratified median prices for Auckland, Wellington, Christchurch, Other North Island, Other South Island as well as National data month-by-month back to 1992.

REINZ HPI stats Sep 2013.png

The offering now is purely a pdf chart.

 

The raw data allowed me to produce the analysis charts I have regularly done to highlight the % variance to market peaks and troughs as per the example here.

Thankfully as I collated the data from 1992 though legal access to these spreadsheets in the past I can now update the data set with the monthly figures REINZ publishes. 

 

The other database that REINZ has turned off is the Market Facts Graph capability. This provided the public with the opportunity to access core data by month back to 1992 by aggregated suburb showing median price, number of property sales, median days on the market and total sales value.

REINZ Market Facts Graph Sep 2013.png

Below is an example of this report when it was available showing the wider Wellington region for a 12 month period.

 

REINZ market facts example Wtn .png

All that is now provided by REINZ in regard to this data is the press release together with the regional data pdf. The other valuable report the Residential Market Statistics which provides the regional monthly data for recent months down to aggregated suburb level is also no longer published after July; so my advice is to go and grab the archived residential reports before they too are removed.

 

REINZ Property Market report Jul 2013.png

In my opinion restricting access to data that was once available for free is a backwards step. This is both in terms of the general principle of making data accessible, so that people can be allowed to analyse and provide perspective and insights; and in the specific sense of an industry that I am sure wants to help people be better informed about buying property rather than what could be perceived as a revenue generating decision as highlighted by the newly appearing references to paying for access to data from REINZ by the general public.