Realestate.co.nz releases a new version of it successful mobile app for iPhone

Update 2 April

This article was written on the 27th March based on the then Version 2.0.1 of the app. On the 1st April a Version 2.0.2 was released that has dealt to all of the issues in this post. 

I am pleased that the company was able to respond so speedily to these issues which I judged to be significant. Clearly the development team is passionate and responsive, it is just a pity that inadequate testing lead to the Version 2 and Version 2.0.1 release without user testing. My opinion of this app has always been positive as in my mind it remains the best app for the iPhone on the market.

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There is no doubt that Realestate.co.nz gained a significant advantage over Trade Me Property when it launched its iPhone app in November 2010. It would be another 2 years before Trade Me released their first dedicated iOS property app. That early advantage has been key to the brand’s development and appeal over these past 4 years.

So, more than 3 years after its initial launch and save for a couple of bug fixes and an upgrade to allow for synchronisation of favourites; Realestate has recently released a whole new Version 2 of its app and I have been naturally keen to try it out to assess the developments that have been implemented.

Quoting their own summation of the changes on the App store, the new app delivers these benefits:

As they also rightly point out one of the great new features is that there is now a true iPad version - something long overdue as Trade Me Property has been the only purpose designed iPad property app for nearly 2 years.

Mobile apps are critical for property portals as the trend is ever more focused to mobile usage when searching for property. In the US, UK and Australia, the leading portals attract well over half of all visitors via a mobile device, with the US portal Zillow claiming weekend mobile activity approaches 70% of traffic. With this as a backdrop, delivering the best user experience on the mobile platform is critical for any property portals. 

Sadly I have to report that Realestate.co.nz appears to have let itself down with this V2 in what appears to be a 1 step forward, 2 steps back release. Whether it is a case of a rushed release or inadequate testing, this version has some serious weaknesses. This could have very serious consequences on the brand and the business especially considering how competitive this portal space is today in NZ. (By the way, I have deliberately waited a couple of weeks after the initial release of V2 to write this review to ensure that if they had spotted these issues, then I was prepared to allow them time to correct these issues. In fact they have already released an update with V2.1 a couple of weeks after the V2.0, however as I see it and detail below there remain serious shortfalls).

Let me work my way through the features, benefits and my critique of the this app on the iPhone, I will leave the evaluation of the iPad for another article.

iPhone app

First impressions

The start up of the new app is in many ways cleaner and clearer than before. There is no home screen. Instead the first screen takes you immediately to a local map indexed to your location - great! exactly how the user wants to engage with mobile real estate “show my what’s for sale around me”. In the same way as before listings are signified by red pins with open homes and new listings using cleaner iOS7 icons than the prior flag icon - nice.

Touching a listing pin shows the address exactly as before. However I continue to maintain that this is a missed opportunity as most other property apps bring up a thumbnail image of the property or some details in brief vital to make searching easier, as it avoids having to move through to the listing to validate the property, as ably demonstrated by the example from Realestate.com.au.

When you do go through to the listing you do get the same details page with the great image viewer as smooth as ever. Overall the format is certainly cleaner, very reflective of the iOS7 template.

On each listing the key tabs of Details, Inspection, Affordability and Agent are arranged neatly and carry out the same functionality as previously.

Another missed opportunity in my eyes though is the enquire service. With such extensive usage on the smart phone of this app, why could the enquire service not include a text message integration with the phone - certainly there is a cost associated with sending what may be thousands of texts, but the value would far outweigh the cost. The only option is to type in an email which does not pre-populate with your details as a default.

Map Search

Back to the map, and the first functionality change that frustrated me. In the original V1 version there was a clear ‘Refine” button which allowed you to filter your search on any chosen map area. At first viewing I found no refine button. Trial and error lead me to the search button which had the required filters. However upon making this necessary filter of beds, baths and price; I tap the search icon fully expecting to be taken back to the local map - no! I now get a map of the whole country filtered for my 3 beds, 2 baths $500,000 to $600,000 !!

This is a serious issue as all I wanted to do was refine my local search - I was after all doing a local search around me. After picking up my iPhone back from the corner of the room where I had thrown it… I thought to try the GPS location icon at the top of the screen and low and behold I am back to my local map. Why oh why do I have to jump through hoops now, to do what used to be so easy!!

This experience really concerns me as one of the beautiful user experiences I liked with the original version was to effectively “fly around the country” seeking out what is for sale based on the map search - how can I now do this now, when if I want to refine my search, I end up looking at the  whole country?

After random trial and error sometime later I did notice that in the search options there is a filter that says ‘Current Map Location’ - but it is by no means easy to find hidden as it is under Regions! User testing would have highlighted this shortfall I am sure.

Search refinement

Another grumble in what I would have hoped would be an improved V2 of the app would be around the search filters of beds, baths and price. The ideal I would have thought would be to replicate search filters of the web on the mobile app - allowing for example to be able to search for properties having between 2 and 3 bedrooms. No - you can only choose 2+ on the app, which clearly gives you 2,3,4 and 5 bedroom houses. Also the website allows for 25 price segments, whereas the app you have to choose from just 16 - hardly a ‘mobile-first’ approach.

Synchronisation with Favourites

Some of these preceding issues may seem small and in someways they are, however the next one is a whopper. Where has the synchronisation between the web and mobile app gone if you have an iPhone 4 or 4S?

Simply put, the developers of this app clearly only tested on the iPhone 5 for as the screenshot below demonstrates the layout is optimised for the longer screen of the iPhone 5. On a 4 or 4S the bottom of the screen is cut off thereby effectively relegating owners of these models to a far inferior app! I thought that the V2.1 would fix this - but not happening. It’s like I can see where the function link is in the filter section but it looks to be hidden? 

Listing Search

Another significant failure of the app is the ability to search by listing number. The search function has a classic search box as in the original version to allow access to a single listing by entering a listing number, so allowing you want to look up details on a property having seen it in a newspaper or street sign. Try as you might (as I have done) it does not work. Worse still some listing numbers take you to other places in the world - try 013 and you end up in northern Holland, 0555 takes you to Pensacola in Alabama!

I did after a couple of tries notice this small text below the search box "Start Property ID with a #"! - how bizarre, this was not a requirement of the original version of the app, why now do I need to add a # to the ID number? - sadly this advice proved useless as adding the # did not aid searching - the search by ID number seems broken - please fix! 

The example below demonstrates the issue. Listing number BOT21586 is a 3 bedroom property for sale in Pakuranga, one of thousands of such properties for sale. Enter BOT21586 on the app and you get a notice "No location could be found", search #BOT21586 on the app and you get a notice "No listings with that number could be found" - but do a map search for 12 Elizabeth Street and the listing can be found on the app and the listing on the app has the listing number #BOT21586 !

Enough of the negatives I hear you cry! - so what can I praise ? - well the open home calendar sync is beautiful and super smooth. The open home times are laid out in a logical position and tapping the chosen time and adding it to your calendar is great. There you go.

Other than that and the above mentioned examples of issues, I still think this is a good app. I am just surprised and disappointed that the app does not seem to have been tested adequately.  In my opinion technical developments of this nature have to take a significant step forward and add features that enhance the experience. I would have to say that overall this version 2 is a case of form over function, of a desire to create an iOS7 look driven by the need for an iPad app which then spawned a iPhone app as a secondary outcome with many resulting issues.

It will be interesting to see if these issues are addressed in the coming months.

Disclaimer: I was formerly the CEO of Realestate.co.nz from 2006 to 2012. I now have no relationship with the company, nor with its competitor Trade Me Property. I have written this review as an impartial objective analyst and commentator on the real estate industry in NZ and overseas. In my current role I do advise and assist other property portals in other countries on strategy and operations and thereby judge that I am in a position to offer such a review, for no other reason than professional advice.

Do rising mortgage rates depress price appreciation?

Just last week I undertook a detailed analysis of property sales and property prices for the past 20 years and matched them to the movements of mortgage rates in the article "Mortgage rates on the up - what will be the reaction of the property market?

A comment on that post raised my interest:

Hello Alistair
I refer to your graph entitled Rising mortgage rates generally depresses price appreciation.
I contend that the data indicates that for the first 3-4 years of the 5 year period displayed, median prices continued to increase, perhaps conservatively by 10% year on year. I don't have the raw data but it would be very interesting to overlay the 2 data sets and create a single line.
My point is this. The Reserve Bank just started increasing rates from all time lows. Historically your data indicates approx. 10% median increases in property prices for 3-4 years thereafter. So my conclusion is the opposite to yours, and price appreciation will occur, to the tune of 10% p.a. over the next 3-4 years in the absence of any major economic setback. Factor in Improving employment, Canterbury rebuild and Chinese investment and you have a glass half full situation in my opinion (if you own real estate).
Regards
Raefe

The graph to which he refers is this one tracking the periods of 1994 to 1997 and 2003 to 2008. My contention as I stated in the article was that during these periods when mortgage rates were on the rise property price appreciation was depressed. Not that prices fell, just that price appreciation was curtailed.

As per the recommendation of the writer of the comment I have redone the chart to align the two periods on split axis.

I would agree, that the fact is, that given the historical experience of mortgage interest rates being raised whilst property prices have been growing at a reasonable rate the impact is not to instantly depress price appreciation, rather as the chart would seem to indicate the market adjusts. 

It is possible to argue that the reaction of the market is to mark-time for the first year as interest rates are raised, then adjust to a lower rate of appreciation for anything from 2 years to 4 years - that is all the data that is available.

Apply this analysis to the current market it would be possible to support the writer of the comment and suggest that the likely trend in prices is to see a continuation of the current rate of price appreciation of c.10% per annum for the next 3 - 4 years.

Latest census provides valuable insight into property in NZ

The 2013 Census data is being released in tantalising nibbles by Statistics New Zealand over the next 12months. I make no criticism by this comment, I am just eager to see what we can learn from this long awaited census data delayed by 2 years as a function of the Christchurch earthquake.

The data set on households and housing makes very interesting reading and I have distilled what I think are the pertinent facts.

The headline grabbing number that has been capturing the media’s attention is the fact that in 2013 the proportion of the population that occupy a property that they own or partially own as their usual residence has fallen to below 50% - leading to the statement that there are now less people living in their own home than renting. This is significant and a trend that has been accelerating over the past decade. In absolute numbers, the number of people living in their own home grew just 1% between 2006 and 2013 at 1,590,546 whilst the number not living in a home they owned (or partially owned) grew 16% to 1,603,011.

This statistic of more than half the population living in a home which they did not own seemed to be out of alignment with a commonly held statistics of “home ownership” at around 65% which is often quoted. I did find within the Census data the fact that 64.8% of households (of which there are 1,549,890 in NZ) live in a house which they own or partially own. So just to be clear; just less than half the total population now live in a home they own, whilst just under two thirds of all households own their own home. From this we can also infer that the average household not owning their own home consist of more than the average 2.9 people per household - interesting.

Of somewhat greater significance is the age disparity of property ownership. In 2013 the proportion of people aged 20 - 29 years that are living in a property they own dropped to just 27% - 12 years ago in 2001 that figure was 47%. Similarly a significant drop was seen in the 30 - 45 year age bracket down from 84% in 2006 to 75% in 2013. In fact within this age bracket over the past 7 years the number of people living in a home they own dropped by over 86,000.

Looking at other insights from the data. The total number of dwellings has risen 7% since 2006 to 1,756,143 of which 185,448 were classified as unoccupied, up 16% from 2006, a further 9,756 properties were under construction.  

This growth in the number of dwellings is lower than the growth between prior census periods which has been of the order 8% - those being 5 year periods where of course this is a 7 year period, further demonstrating how the shortage of new house building has effected the property market.

A continuing trend seen in the census data is the household occupancy rate. This has continued to fall to a new level of 2.87% reversing a small rise between 2001 and 2006.

Finally the composition of the housing stock is gradually changing. The predominant type of property is a standalone house representing 76% of all occupied dwellings, down very slightly from 2006. Within this type two storey properties are growing faster (up 12%) than single storey (up 4%).

Apartments and Townhouses represent 17% of all dwellings, however when it comes to Auckland the figure is 23% and in the inner city centre in the Waitemata Board area the predominant type is not the standalone house, but apartments and townhouses representing 65% of all dwellings up from 57% just 7 years ago. 

Dress for success - presenting a property ready to sell (Updated)

Update: I have been asked by many people the question - "so how much more did this house sell for after being cleaned up?" - well the facts are: It was sold in January 2013 for $435k which represents how it looked in the Before pics and then it was on the market again within 5 months and sold in July 2013 for $550k.

I have over the years seen many examples demonstrating the value of do-ups where for the sake of a bit of tidying up and a lick of paint a property can be re-marketed after only a short period of time and through the process attract a wider audience and as a result attain a higher price. It is the subject of TV makeover shows in this country and overseas.

I was therefore delighted when some eagle-eyed person contacted me a while back to share just such a real life makeover. They brought this property to my attention as it was close to where they had bought their first home some months earlier.  Given the property details they provided, I was able to collect together the images of the property in a before and after state. This gave me the opportunity to undertake a interesting and hopefully helpful evaluation of the process to examine the enhancements.

Exterior of the property

The property was the subject of a general clear-up with lawns cut and levelled, The somewhat sad looking tree was removed opening up the front of the property to emphasise the clear tidy lines of lawn and path. When it comes to photography removing extraneous objects in this case the car and defining the property better by using a filter to create a clear blue sky effectively lifts the property creating a sense of presence and makes the property far more appealing. The exterior photo of a property for sale is so important as it should be the No.1 photo - the one that appears on the primary search results page. This photo has to be good enough to get people to click through to the fuller details. I think you would agree the After photo is far more likely to attract attention and engender click through. 

The Kitchen

More and more attention is these days paid to the kitchen as the hub of a property and for this reason it deserves close attention to optimise its appeal.

The key to the presentation of the kitchen is de-cluttering to create a sense of space. The removal of the items on top of the kitchen cupboards effectively lifts the room to seem more open and lighter. More internal lighting is used to add warmth, this is accentuated by the addition of a rug that softens the hard vinyl floor coverings. Kitchens are functional areas of a house but when it comes to presentation, less is more and extraneous items like the microwave can be removed to create this sense of space. Notice also the professional photographer captures external images through the window to balance the internal artificial light - so much better than the glare in the before photo.

The Living Room

This is a striking "before & after" photo set that highlights the content and the photo. This area has received the benefit of the new floor coverings which together with a clean white lick of paint has brightened up this area, additionally helped by the removal of the heavy old curtains. The modern chunky style of furniture on the vibrant new rug creates a focal point for the room with the bold touch of red in the chair cushions creating visual impact.

As for photography, the angle of shot is important as is the lighting; hiding the ceiling detail so evident in the before shot. Excess exterior light so dramatically darkens the room thereby diminishing the opportunity to showcase the rooms. Again a wider angle lens on the camera creates a sense of space and allows the property buyers to see more context of the whole room.

The Bedroom

In the bedroom the old curtains set to the height of the window effectively lowers the height of the room. The new carpet adds warms and in this case adding more furniture adds a sense of richness with the red rug adding a feature. The headboard also creates a sense of height and the bedside cabinets appear to create a bigger room. The lack of curtains is a functional loss but an aesthetic gain. In terms of photography the critical issue here is lighting using extensive internal lighting as well the wall lights provide warmth also in so doing it allows to create definition through the window to the trees outside by shooting later in the day without bright sunlight.

The Bathroom

The key improvement here in the bathroom is the fitting of  shower attachment, providing for a much needed requirement of any bathroom. The room has been painted and as ever decluttered. This is a clear demonstration of the benefits of a wide angle lens which captures the room from door to towel rail with full view of the window and vanity. Again the light balance is so key ensuring that the window does not become the distraction as it clearly is in the 'Before' photo.

The point about this exercise is that this property was not the subject of a very expensive makeover - I would judge that the total costs of the work, materials and finally staging and photography cost around $7,500. The eagle eyed neighbours told me the closer inspection at an open home showed some less than perfect painting, but the overall impression was appealing. When it comes to selling a property success is all about maximising impact. This before and after photo comparison in my opinion certainly testifies to the enhanced impact that can be created by a make-over and a great photo shoot. Naturally as you would expect the property sold for a great price with significant interest far better than the initial sale - not surprising when you view the before and after shots.

Mortgage rates on the up - what will be the reaction of the property market?

Last week we witnessed the first increase in the OCR since July 2010 when the rate was then raised from 2.75% to 3.0% - that change was short-lived as in March of 2011 it was dropped to 2.5%; a level it has maintained since. 

The fact is that the current levels of interest rates, which have been pretty much stable for the past 5 years represent an unprecedented period of low interest rates. A quick look back in history shows exactly how the past 5 years contrasts with the volatility of the past 50 years.

Historically mortgage rates have experienced typical cycles of rises and falls, especially over the past 25 years, with rates topping 20%+ at the end of the 80's. To put that into perspective a 30 year mortgage for a median priced $415,000 property which today based on an 20% deposit costs $1,948 per month would cost $4,198 at 15% mortgage rates and a staggering $5,684 per month if we were to experience the 20.5% mortgage rate of June 1987 again!

We are certainly going to have to adjust our expectation as mortgage holders to paying more a month in the coming years as the trend is upward. The recent 0.25% increase added $53 to the monthly cost of a 30 year mortgage of the median priced house.

Of equal concern to most home owners with a mortgage is the likely impact these rises in mortgage rates will have on the property market, both in terms of levels of activity and price.

Whilst data from the Reserve Bank on interest and mortgage rates goes back 50 years the data on property sales and prices from the Real Estate Institute only goes back 20 years, however the past 20 years does provide us with some valuable data as to the property cycles of the period for analysis.

The chart above tracks floating mortgage rates since 1992 and as highlighted by the coloured sections, this timeline does showcase some parallel periods of rate changes which can provide a basis for analysis.

Rising interest rates - The red sections "A" - this occurred between March 1994 and September 1996, a period of 31 months.  A similar rising interest rate period was from October 2003 to July 2008, a period of 58 months.

Falling interest rates - Green section "B" - this occurred between April 1998 and August 1999, a period of 17 months.  A similar falling interest rate period was from August 2008 to July 2009, a period of 12 months. 

Volatile interest rates - Orange section "C" - this occurred between September 1999 and December 2001, a period of 28 months.  A similar period of volatile interest rates was from February 2002 to September 2003, a period of 20 months. 

So taking these three defined parallel periods of activity it is very interesting to see what happened to property sales volumes and prices during these times.

Rising interest rates

The two periods of rising interest rates were lengthy and progressive and both covered periods when economic activity was strong and with it the threat of inflation and that was the trigger for tighter monetary policy.

The impact of these rising interest rates spread over 3 to 5 years was to depress sales as the chart below shows. It is somewhat striking to see the degree of correlations between these two discrete periods. The period in the 90's did see some recovery towards the end of the period but the first 12 months was generally depressed. In the case of the 2000's the long term impact (heavily influenced by the GFC) was a significant depressing of sales volumes.

When it comes to property prices as measured by the median price the trend across these two discrete periods again shows a high degree of correlation. Both periods witnessed a decline in the growth of property prices. It was only towards the end of the 5 year period in the last decade that prices actually went into negative growth.

Falling interest rates

The two periods in which interest rates fell were short-lived, representing just 17 months in the end of the 90's and just 12 months in 2008/9. Both of these periods came about as a function of the necessary reaction of the Reserve Bank to external stimuli - in the late 90's it was the Asian Economic Crisis and a decade later the Global Financial Crisis.

The impact of these significant cuts in interest rates was to stimulate property sales as the chart below shows with again a striking correlation between the two discrete periods.

When it comes to property prices the fact is the data shows that the falling interest rates aided the stimulation in property prices. In the most recent period of 2008/9 dragging prices back from actually falling, whilst in the 1998 period it managed to stave off what could have been and was very close to falling prices.

Volatile interest rates

The past 20 years have witnessed two coinciding periods when interest rates showed significant volatility, in the space of 2 years interest rates rose and then fell to return to the prior period rates.

These instances occurred during the early years of the last decade and were triggered largely by global economic events. Clearly this degree of rising and falling rates can lead to uncertainty.

In the case of property sales, volatility in interest rates seems to establish no clear correlation between the two periods nor in fact any clear direction of the market. The earlier 1998/9 period saw sales fall and then recover, almost in line with the interest rate hike and then cut; as for 2002/3 sales fell but with some rebound.

As to property prices during this volatile period, again as with sales volumes the correlation between the two periods is not clear and the trend seems to show no significant movement up or down. The 2002/3 period did see a very marked rise after 12 months as interest rates fell; this was though the beginning of a very strong bull run on prices through to 2007.

So whilst by no means scientific, there is clear data to support the view that the occasions when interest rates are rising is a time when property sales ease and prices slow; whilst interest rate cuts stimulate property sales and inflate prices. However uncertainty in interest rates tends to leave the market marking time. With the Reserve Bank clearly signalling that we are about to experience a period of 2 to 3 years of interest rate rises it would seem to be fair to say we will see sales volumes ease and price growth slow.

LVR impact is significant and growing

The Reserve Bank has released actual data on the extent to which banks are lending at 'Loan to Value' levels of 80% and above - the threshold imposed by the Bank Governor in October last year.

At the time the Governor stated that "From 1 October 2013, banks will be required to restrict new residential mortgage lending at LVRs of over 80 percent (deposit of less than 20 percent) to no more than 10 percent of the dollar value of their new residential mortgage lending". 

Well the fact is that based on the months of December and January retail banks are not only keeping such lending below the threshold of 10% - they are actually barely touching 5% of the loans (by value).

In January just $147m of lending was made above the 80% LVR threshold representing just 4.8% of the total value of lending in the month. Accepting that January is a quieter month this amount represents a fall of almost almost 90% as compared to August last year.

What is interesting is the extent to which this significantly reduction of lending above the 80% threshold equates to in terms of the number of first time buyers in the market. For this analysis I have made some assumptions as full details are not available.

The data of weekly mortgage approvals published by The Reserve Bank shows the number and the total value and thereby the imputed average value. I have made the assumption that rather than thinking high LVR loans will be at a lower than average value, they are in fact more likely to be well above the average. The logic is that within this data set from the Reserve Bank of mortgage approvals is not just new loans but also refinancing of loans many of which may be older loans and thereby at a lower average value, whereas first home buyers representing a higher proportion of high LVR are likely to see loan values closer to say 80% of the median house price, thereby a loan of $330,000. For this reason I have assumed that high LVR loans have an average value of $275,00 whereas the average for all loans is closer to $175,000.

This table below sets out the overall data of the average of mortgage approvals for the 22 weeks pre 1st October and the 22 weeks since 1st October.

Total - all mortgage approvals	Number of mortgage approvals per week		Total value of lending per week		Average Value
Pre - 1 Oct 2013	6,803		$1,212,192,555		$178,185
Post 1 Oct 23013	5,863		$973,287,315		$166,005
Variance	-14%		-20%		-7%

Approvals - LVR over 80%	Number of mortgage approvals per week		Total value of lending per week		Average Value
Pre - 1 Oct 2013	1,102		$303,048,139		$275,000
Post 1 Oct 23013	177		$48,664,366		$275,000
Variance	-84%		-84%		0%

Approvals - LVR below 80%	Number of mortgage approvals per week		Total value of lending per week		Average Value
Pre - 1 Oct 2013	5,701		$909,144,416		$159,471
Post 1 Oct 23013	5,686		$924,622,949		$162,614
Variance	0%		2%		2%

Based on the data and the assumption of high LVR loans, the data would seem to show that the massive reduction (close to 90%) in lending at high LVR represents a fall from around 1,100 such loans a week before the intervention of the Reserve Bank to an average of just 177 per week since the 1st October. Admittedly the last 2 months prior to implementation did likely see a degree of a 'lolly scramble" ahead of the changes.

The impact of this tightening of lending controls in the housing market has consequentially lead to the overall lending market being down 14% in the number of mortgage advances and 20% down in value, with the traditional lower LVR loans hardly changing in volume or average value across this period.

Clearly we only have 4 months data and the next few months will be most interesting to observe as to the trend, but at this point in time the data would seem to point to the view that the retail banks are being tighter in their implementation of the Reserve Bank's policy restriction than required - significantly impacting the property market.