Barfoot & Thompson post a record year of sales for 2013

by Alistair Helm in ,


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The largest real estate company in Auckland, Barfoot & Thompson published their most recent sales report for the last month of December capping off what has been a stellar year for the company.

Whilst December witnessed a slowing of sales with just 817 properties sold down from the 920 sold in the December last year the company accounted for sales of 13,123 properties in the past 12 months a growth of 12% amounting to an extra 1,413 sales compared to 2012. Set against a total of 31,782 properties sold in Auckland in the past year this gives Barfoot & Thompson a market share of 41% - 2 of every 5 homes sold in Auckland was sold by them in the past year.

The key statistic though is the shear scale of transaction value - $8.5 billion of property sales undertaken by the company, an increase of 24% on the prior year. The company currently is selling  properties at the rate of over 6 properties every hour of the working week and billing services at the rate of around $100,000 every hour of the working week.

Barfoot & Thompson annual sales and value 2013.png

The company has benefited from the significant resurgence of the property market in Auckland selling more than twice as many properties in 2013 than in 2008 at the depth of the property collapse. in dollar terms the value of sales have risen faster especially over the past 3 years with value of sales up 68% in just 2 years.

The stellar rise in sales volumes though does show signs of slowing as analysis of the past few months shows. On a seasonally adjusted basis December sales were down 6% following a 12% seasonally adjusted sales volume fall in November. As cited last month part of the reason for the fall could well be put down to the impact on the first time buyer segment as a result of the Reserve Bank restrictions on high LVR lending.

Barfoot & Thompson seasonally adjusted sales 2013.png

The latest analysis of the sales volume by price segment of Barfoot & Thompson sales data shows that this bottom segment - sub $400k which is very much a target market for first time buyers remains a declining proportion of Barfoot &Thompson’s portfolio of sales. In November it represented 17% - a month later it had fallen to 16%. A year ago this segment accounted for nearly 1 in 4 of all sales, such has been the slide in activity in this segment of the market.

Barfoot & Thompson sales sub $400k Dec 2013.png

This movement between price segments has been a trend witnessed across all property sales over the past 4 years as the market demands of property in the Auckland region have accelerated prices and fuelled higher priced segments. 

In the past year alone Barfoot & Thompson has sold over 1,500 properties at a price of over $1,000,000 , this compares to 500 just 3 years ago and in the $2,000,000 and above segment sales in 2013 totalled 176 properties compared to just 52, 3 years ago - that is going from selling 1 per week to selling 3 per week.

Three years ago the largest segment of sales representing 2 in every 5 properties sold by Barfoot & Thompson were at a price of less than $400,000; whereas today that largest segment is represented by property priced between $600,000 and $1 million which represents 1 in 3 of all sales, whereas property below $400,000 has slipped to less than 1 in 4 of all sales.

Barfoot & Thompson sales by price range 2010 2013.png

Clearly the Auckland market continues to show strong demand and appreciating prices - in December Barfoot and Thompson reported that the average price for all property sold in the month has exceeded $700,000 for the first time ever. That growth is not likely to be arrested any time soon given the signals of economic growth and vibrancy of the Auckland economy in the coming year. 


LVR impact in Auckland market hidden in the data

by Alistair Helm in ,


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The headline from the Barfoot & Thompson's November Market Update stated confidently "Mortgage restrictions no barrier to Auckland house price increases". The commentary then went on to say that the LVR impact has yet to show up in housing activity (sales) or sale prices.

The data then stated that both average sale price and median sale price were up again as highlighted by the chart below.

B& T price Nov 13.png

 

A cause of the further rise in sale price for November was the record level of sales of homes over $1m - 189 of them a record for the company. In November last year that total of sales over $1m was 129, a variance of 60. That increase in sales at the top end would impact the average price but the median price would be less impacted. However what is more likely to impact the median price and the average price was a variance of 97 in sales of lower priced properties. In November 2012 B&T sold 292 properties below $400,000 this November that number was 195. Seen as a proportion of all sales in the month as the chart details below the drop is significant.

B&T Nov 13.png

 

Clearly the monthly drop in November was significant but the trend has been established for quite a few months now as the lower end of the market as served by B&T in Auckland (who represent around 40% of the market) has fallen away. The November one month fall from October this year is more significant than either of the past 2 years indicating that the impact of the LVR restrictions are being felt through the numbers.

These detailed sales by price bracket data is provided by B&T on their site and I applaud them for that openness, something that we have seen withdrawn by the Real Estate Institute who used to make such data accessible but now decides to charge fees to access. 

As I stated last month in the article "The LVR speed limit - crippling or merely cooling the market"

We will need to wait until at least the November sales figures and more likely until the new year as well as to study housing loan approvals before the definitive statement can be made as to the true impact on the changes as a consequence on the high LVR restrictions, indications certainly show an impact, though that impact in sales is not huge as yet.

Here we have the first indicator through the Auckland market from B&T - not featured in the headline, but buried in the detail. As I said the November sales figures should give us some indications. Here is some such data - will we get detail from the Real Estate Institute in their data or will the headline smooth over the facts?


The LVR speed limit - crippling or merely cooling the market

by Alistair Helm in ,


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The Real Estate Institute in their monthly report for October stated in headlining their report that "LVR Restrictions Impacting Sales Volumes" - they went on to say "sales volumes eased back in October following the introduction by the Reserve Bank of restrictions on high LVR lending". The actual sales in October were 6,778 which was up 2% on a year ago, that month of October 2012 was up 32% on the prior October of 2011, which itself was up 28% on the prior year being 2010. So in the space of 3 years sales volumes are up 74%, in fact the level of 6,778 is the median for the past 21 years. 

Property sales growth is slowing - looking at the trend of monthly sales as compared to prior year we are coming to the end of a run of 30 straight months of growth in sales year-on-year, by no means the longest run, but a strong recovery from the property crash of 2008 as the chart below shows. Typical towards the end of a long run of growth comes more erratic variance as the growth begins to turn negative as we are seeing in the October figures.

REINZ monthly sales var.png

 

Added to these factual statistics from the Real Estate Institute was the monthly survey of real estate agents published by the BNZ and initiated through the Institute. This survey which I have mentioned before could be a vital sense of a pulse of the property market as the Institute represents almost all licensed agents. Given that it is a shame that from the population of close on 10,000 such low reporting of the monthly survey occurs. This month the survey looked for verbatim responses to the statement "What effects have you noticed from the LVR rules?". There were 247 responses published by the BNZ report. A quick count up had 180 of these comments showing a very pessimistic view on the impact of these LVR changes and the impact on first time buyers and open home attendance as well as performance of auctions. Here is sense of the responses:

 auction rate under the hammer has dropped dramatically

number of first home buyers in the market has decreased markedly

More very frustrated Vendors

Majority of first home buyers dropped from the market

Drastic decrease in competitive bidders/bidding

Massive decrease of first home buyers

Definite drop off in first home and migrant buyers

Huge decrease in people looking at property

A lot of Sale and Purchase agreements are not going unconditional or if they are it is at a cheaper, 
renegotiated price

Massive reduction of attendees at open homes

Overnight no enquiry from first home buyers. they have been scared away

 

Reading through these and the other verbatim comments reflecting a net 72% negative you would soon become depressed about the future months of property sales with a sense of up to 30% decline as that has been the often quoted component of 1st time buyers. However the reality is there is no accurate source of data that shows what 1st time buyers actually represent of the market so any prediction of effect is largely guess work, and the views of agents from what is a very small sample - just 247 from 10,000 (2.5%) should be taken with a note of caution.

There is though data from the Reserve Bank that reports the weekly levels of Housing loan approvals of both new mortgages and re-mortgages. Such data provides vital opportunity for analysis as I have done in the charts below.

RB actual mortgage approvals.png

This chart shows in the red line the 4 week moving average of the number of housing loan approvals made by trading banks. The last few weeks of October certainly showed an accelerated decline, however the trend as best seen in the grey line being the 12 week moving average shows that volumes had been declining since a peak in May of this year, however they still remain around 6,000 a week.

The next chart shows the trend of volume comparing the 4 week moving average year-on-year. This chart certainly would seem to show a picture of the announcement of the decision to implement the speed limit of high LVR triggering a slowing in volume of new housing loan approvals, in effect reversing a period of recovery which began in July, although as with the prior chart the longer term trend still shows slowing growth.

RB mortgage trend.png

We will need to wait until at least the November sales figures and more likely until the new year as well as to study housing loan approvals before the definitive statement can be made as to the true impact on the changes as a consequence on the high LVR restrictions, indications certainly show an impact, though that impact in sales is not huge as yet.

 

 

 


Are we losing access to vital property data?

by Alistair Helm in


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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.

 


Long term property investing reduces volatility

by Alistair Helm in , ,


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The headline may be a case of deliberately stating the obvious, after all, economists will always tell you that investments of any shape or form; whether shares or property perform well in the long term, their advice is be patient, stick with it.

No; my interest was not in a catchy headline. I wanted to examine the data behind the claim that longer term investing in property from a rental business perspective is less volatile, especially when compared to shorter term investing. To be clear I judge short term to be 3 to 5 years with long term being 10 years. 

The ability to undertake a detailed analysis of the investment returns of rental property has been greatly assisted by the Ministry of Business, Innovation and Employment who have released online the full data set of rents by Territorial Local Authority (TLA) by month going back to 1993. The data set identifies the mean rents and the lower quartile rents.

I have used this data set and mashed it together with the REINZ median house price data going back to 1992 and the Reserve Bank of New Zealand data on mortgage interest rates for the same period. This collection of data has allowed me to build a model that shows the real rate of return based on the median house purchased and rented with a notional 100% mortgage paying the monthly variable rate of interest on the mortgage. The rate of return is based on the selling price at the end of an investment period being the median price at that month, plus the monthly rental income, less the mortgage payments, less the original purchase price at the start of the investment period based on the median price at that month. Note that mortgage payments are only the interest component.

Before detailing the presentation of this data I thought a couple of preliminary charts might be of interest. The first is the indexed growth of property prices and rents over the period since 1993. 

House prices have far outstripped rents.png

Not surprising here. Property prices have soared ahead of rents. Given the often quoted economists view that property prices need to reflect fundamentals of the comparable cost of renting, the message clearly have not got through. The massive divergence of the indicies from 2003 onwards is so clearly seen in the chart. There was some adjustment as property prices eased back in 2008 but the recent resurgent property market now sees property prices at an index of 350% of where they were in 1993 with rents at 232%.

Looking at the financial performance of rental investment, a simple judgement of the investment is to see how much of the monthly mortgage repayments is covered by monthly rents. The chart below details this as a trend line by month from 1993 to date.  

 

Rents as a of mortgage.png

As can be seen the fact is that at only two occasions over the past 20 years has the the mean rent actually come close to covered the monthly mortgage. Towards the end of the 90's when property prices stagnated and interest rates fell as a function of the Asian Crisis and then again in 2002 jus before the massive surge in property prices again at a time of low interest rates. However in today's world when interest rates have never been lower for longer the rental income barely covers 80% of the mortgage repayments as property prices continue to grow. 

So having provided some contextual data for the mean rents, property prices and mortgage rates here are the charts which show the actual financial return in dollar terms for rental property invested over a 3 year / 5 year / 10 year period for each month right up to June 2013.

 

3 year investing.png

Over the 3 year horizon the significant returns achieved by buying in the early 2000's are not even close to being achieved again at this time and clearly the worst outcome would have come from the net losses attained in the period of 2009 to 2011.

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The 5 year horizon resembles very much the 3 year investing picture, with slightly higher returns for those exiting in the perfect position of the peak of the market in 2007 - again recent returns based on a 5 year investment come nowhere close to those levels.

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The 10 year investment horizon demonstrates the value of long term investment which is always around $70,000 for the 10 year period. What is interesting is despite the recent low interest rates and rising prices the recent level of return is declining and is likely to continue to show lower returns on a 10 year horizon as the purchase period slips into that period that saw the greatest rise in property prices. So the guidance would be - hang on in their for the long term.

The short term investment of 3 or 5 years can achieve excellent returns but as ever you have to time the market perfectly and this is only ever really seen in hindsight. The current return on all 3 periods shows a level lower than the peak and the average. 


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

Auckland inventory levels plummet

by Alistair Helm in ,


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It may be hard to believe but a year ago there were 11,272 properties on the market for sale across Auckland. At that time an average of 2,000 properties a month were sold across the region. Leap back to the current time - May 2103 and there are now just 7,557 properties on the market across Auckland, a drop of nearly a third in just 12 months. Over the same period sales have risen over 20% on a moving average to around 2,500 per month.

Auckland is very nearly running out of properties to sell.

Based on the seasonally adjusted sales matched to available inventory if no new property came onto the market, the Auckland property market would stall, with the very last property being sold on 23rd August, just 12 weeks away!

Now this is a hypothetical calculation but for context look at the Auckland property market over the past 5 years as seen in the chart below tracking sales on a 12 month moving average and the representation of inventory using the Property Dashboard from that time.

Akl MA sales & inventory dashboard May 2013.png

Five years ago in April 2008 you couldn’t give property away! – there were 18,266 properties on the market, which is virtually two and a half times as many as there are today. That total at the time represented over 60 weeks of equivalent sales. From 60 weeks to 12 weeks in 5 years, how the property market has shown its cyclical nature!

Whilst this is the current picture, the real question looking forward is – when will things improve?

By the nature of cycles they do self-correct and tend to overcompensate, so at some stage the Auckland market will move out of being a sellers’ market. However don’t wait for this flush of new building (estimated at 30,000+ over 3 years) to ease the problem, the issues are more immediate, new builds take 12 to 18 months before they appear in inventory in a best case situation.

The picture tracking new listings and sales looks pretty dire as the chart below shows – sales are growing at a year-on-year rate of 20% whilst listings are falling on a comparable year-on-year rate of over 25% and actually getting worse!

 

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This decline in listings is actually the result of the low inventory in what is becoming in my opinion a downward spiral. Property owners, ready to sell, know full well now that property sells quickly in this sellers' market, yet at the same time they also know that such a tight market with rising prices means that they are being held back from selling because they fear not being able to buy.

This problem is also potentially being exacerbated by the focus on auctions as the predominant  method of sale. Whilst auctions might well favours sellers, they do not suit buyers who themselves need to sell their house in order to complete the desire transaction.These buyer/sellers' therefore are cautious about making unconditional offers and finding the necessary 10% deposit when there own house is not sold, or even on the market.

How to unblock this log-jam? 

This situation could be alleviated by agents moving away from auction as the preferred method of sale. Not a likely scenario as it is their own favoured method. What is more likely to happen is that at some point, and in my view we have reached this point within the inner ring of Auckland suburbs, auctions will start to falter, resulting on property moving to ‘sale by negotiation’ which then suits conditional offers thereby allowing those buyers to then put their house on the market and create some liquidity in the market.

What we have witnessed in the Auckland property market over the past 18 months to 2 years has been a kind of tidal wave of property activity and increasing prices which started in the top suburbs, the inner ring of city suburbs and is moving out to the outer suburbs now. This tidal wave heightens demand and sales volumes which sucks up inventory driving prices, before we see this situation self-correcting as property sales stall and inventory rebalancing.

Data for this analysis is supplied from the Realestate.co.nz NZ Property Report


The importance of sales volume trends in the property market

by Alistair Helm in


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Watching the property market as an active investor or an interested property owner you are, I am sure, always looking to see where the current trend is heading to try and be ‘ahead of the curve’.

There is one basic fundamental that is key to remember and that is the fact that trends in property prices always follow trends in sales volumes.

Sales are a reflection of demand. If demand picks up, sale spick up and as a result property price rise. This is not the case with most other products or services; as a rise in demand usually leads to a rise in supply and that manages through competitive pressure to curb price rises. In the property market as the base product is not homogenous the supply side (vendors) is very poor at responding to the demand side pressure. Just read the constant headlines of the NZ Property Report of the past 2 years – low inventory of houses on the market drives a sellers' market leading to rising asking prices and, as we have seen recently, rises in the selling price of property.

Naturally as demand falls, then sales fall, and again as a result of the inability of the supply side of the property market to adequately and effectively respond to this change, the levels of unsold properties on the market rise and this drives a buyers' market which will see prices ease or fall.

This is why to be a smart observer of the market you need to focus on the property sales volume trend, as the price trend is a ‘rear-view-mirror’.

The definitive source of property sales data is the monthly REINZ report, however on its own it is not clear what this is saying about sales volume at this time. The latest report for the April month stated:

REINZ data shows there were 7,104 unconditional residential sales in April, an increase of 1,428 sales (+25.2%) compared with the same time last year and a fall of 12.6% compared to March 2013. The increase over March on a seasonally adjusted basis was 0.8%, indicating that sales were slightly stronger than what would normally be expected for this time of the year

Sales are up, they are slightly stronger and yet they were down!

As with all statistics it is how you look at them; get too buried in the minutia of the granular data and you cannot see the trends, take too holistic a perspective and you risk missing the inflection point.

To assist in this process of spotting trends I have developed a couple of charts which I think show a valuable perspective of the property market.

Monthly sales volumes.png

First the core data of monthly sales data for the past 13 years, this certainly shows that sales have risen considerably since 2010 and just last month topped 8,000 – however 8,000 a month sales were the norm rather than the exception through 2002 to 2007. This speaks to the fact that the current fascination for property transaction is nothing as compared to those heady days of the financial easy-money honeymoon, pre GFC.

The trend of property sales growth comparing year-on-year as the chart below shows, provides a valuable insight.

 

Variance in sales yr on yr.png

We have seen 2 years of consecutive year-on-year percentage growth, compare that to the 3 years of consecutive growth at the beginning of the last decade and the 2 years of consecutive decline through 2008/2009 and you get a reminder that property markets, like all markets have cycles – what goes up has to come down.

The final chart is for me the most interesting. It tracks the moving annual total of property sales as a percentage of all private dwellings in NZ.

Percentage of all NZ homes sold each year.png

The long-term average (1992 to 2013) is that 5.9% of all dwellings are sold each year.  The current level is 5.0%. The level of transaction is still well below the long term average, but considering the "new normal” that we may well be experiencing in the property market, post the GFC, then we may well not see the heady highs of 10 years ago of 8% of all homes being transacted as that rampant period of speculation and investor fever is well passed.

To me it ‘feels’ like we are going to see some cooling of property sales, this will likely see year-on-year drop in sales growth, this is likely to lead to a rise in available inventory of homes on the market and thereby ease some of the markets and edge them out of being sellers' markets. A consequence of that could well be an easing in the price increases of property and even some degree of a fall. That scenario is good for everyone (possibly with the exception of the real estate agents).


Have property sales returned to normal levels yet?

by Alistair Helm in


"Property sales up 21% on prior year to the highest level since 2007" read the press release from REINZ summing up the past calendar year.

Certainly the property market has seen a recovery which started last year rising 9% from the low of 56,000 in 2010, and then this past year rising a further 21% to the total of 74,000 property sales.


Property sales 92 to 2012.jpg

However as the chart above shows that sales last year were 10% below the average of the past two decades.

Ranked for those past 21 years from the lowest sales year (2008) to the highest (2003) shows in fact that the total sales for 2012 was identical to the year 1993 - can anyone remember that far back in terms of real estate ??

Property sales in ascending order 1992 to 2012.jpg

That situation where sales last year totaled the same as nearly 20 years ago brings to mind the analysis of relative sales to the number of dwellings in this country.

In 1993 according to data from Stats NZ there were 1.214 million dwellings and therefore the sales in that year of 73,959 represented 6.1% of all dwellings being transacted just above the 21 year long term average of 5.9%. At this time there are estimated to be (we are awaiting the next census) 1.558 million dwellings, so the total sales of 74,000 in 2012 represents just 4.8% of all properties being transacted in that year. Clearly we are yet to return to what might be called normal levels.

percentage of property sales.png

Auctions dominate the market in Auckland

by Alistair Helm in ,


Auction iStock_000010524733Small.jpg

I read with interest the latest REINZ property data for sales in December with a mix of surprise and disbelief this week - focused on this statement:

“A key development during 2012 has been the growth in sales by auction, with the number of properties sold by auction growing by more than two-thirds compared to 2011.  The growth in auction sales has been particularly strong in Auckland where almost two of every five sales are now by auction.  The trend in auctions is evidence of the continued tightness of some parts of the residential real estate market where demand is increasing, but supply remains constrained.”

Total sales by auction growing by more than 66% and in Auckland 40% of sales as auctions!

REINZ auction sales data to Dec 2012.jpg

I found these numbers surprising and somewhat hard to believe. The REINZ has only recently been reporting sales by pricing type and I wondered if their data was inaccurate. The reason for my concern was prior data reported by Realestate.co.nz of earlier in 2012.

At the last period of reporting being March 2012, the number of new listings marketed as auctions was 13% nationally and 24% in Auckland. The data as presented below also showing the make up of auctions a year earlier in March 2011 by region of the country.

Could the representation of auctions in the marketing of property in Auckland have really risen from 24% in March to over 40% in December?

Unfortunately I do not have access to the data warehouse of Realestate.co.nz but the website does provide an easy way of counting listings by date and also by price type. Analysis of the numbers for just new listings coming onto the market over the first 17 days of January is quiet surprising in my mind.

Across the country in 17 days of the 3,621 new listings, just under 1 in 5 (673) were marketed as auctions, in the case of Auckland 424 properties were marketed as auctions out of 1,069 new listings - 40%.

New listings by price type Jan 2013.jpg

I am amazed at the extent to which auctions have taken off in the past year in Auckland, going from 1 in 4 of new listings in March 2012 to 2 out of 5 just 10 months later. Clearly the market is far more dynamic and property is selling fast and as a consequence agents are recommending this method of sale - the REINZ data is bang on, auctions are a key development in the NZ property market.


The property market in October certainly shows growing confidence (in Auckland at least)

by Alistair Helm in


Transient

The property market in October certainly shows growing confidence (in Auckland at least)

The Real Estate Institute released the October statistics to the headline of the "market roars into life" - well certainly it was a very active month with sales up 33% on the same month last year and property prices setting new records.

I think it is useful to see the property market as an industry employing as it does over 10,000 active sale agents and transacting over 72,000 properties in the past 12 months. The value of these annual level of transactions has grown in the space of 12 months by $7 billion; growing from $25.6bn in the 12 months to October 2011 to $32.6bn in the past 12 months.

For me the question remains - is this an Auckland phenomenon or is the "market roaring into life" across other parts of the country?

Just last month prompted by this question I examined the make up of the property market and the representation of Auckland within it and came up with the conclusion that the activity in the NZ property market is largely the Auckland factor. Applying the latest data for October to the same set of historical sales data confirms this continuing trend. 

In October Auckland represented 39.4% of all sales nationally, up from 39.2% in September and up from 36% a year ago. The chart below shows this trend with the red line representing the moving annual total percentage which is growing very strongly through 37% of all sales.

When viewed as sales tracking on a 12 month moving average basis the divergence between Auckland and the rest of NZ is very clear with the gap continuing to widen, although there was some pick up from outside of Auckland. 

As to the other major regions of Wellington and Canterbury, their respective performance is viewed in these charts below.

Wellington is showing some signs of growth, nothing of the order of Auckland and certainly fairly flat over the past 2 years.

Canterbury whilst showing some strong growth through 2011 has seen a plateauing in for the majority of 2012.


The activity in the NZ property market is largely the Auckland factor

by Alistair Helm in


Transient

I guess in someway we all intuitively knew it. We knew that the sense of another property market bubble was merely the frothy demand in the biggest city in the country.

Well now we have the data to back it up – to give us the picture that supports the assertion that the general picture of the property market outside of Auckland is a lot less frothy than we find in the metropolis of Auckland.

Let’s look at the facts. Auckland is home to 1.38 million people, that’s just over 31% of the population. It has around 480,000 dwellings which represent around 29% of all the dwellings in the country.

Now compare that to the fact that for 18 months Auckland property sales has represented more than 35% of the national sales and each month for the past 18 months, Auckland sales have represented more and more of the national sales right up until last month when on a rolling 12 month basis it hit 37% of all sales.

This chart below showcases this trend

The red line which represents the 12 month moving average share, has been growing steadily since the low point in mid 2008 when it was down at just 30%. At that time the representation of Auckland of the total national volume sales reflecting a truer representation of the city’s share of the national total of people and houses.

Looked at on the basis of comparative sales volumes on a rolling 12 month basis shows in the chart below how Auckland property sales actually fell at a faster rate through the collapse of the property market from 2007 through to 2009, however since the start of the recovery in mid 2010 in Auckland (and 6 months later in the rest of the country), Auckland sales have outpaced the rest of the country.

For clarity the chart above shows from the red line (read off the right hand axis) property sales in Auckland; whilst the grey line (read off the left hand axis) shows the total for the rest of NZ in total excluding Auckland.

What is very interesting is that if you look closely at the most recent data points of the past 2 months the total property sales for the rest of the country excluding Auckland is beginning to fall off.

This trend of a plateauing level of sales outside of Auckland is more conspicuously highlighted in this final chart which, tracks the rate of growth (or decline) for property sales in Auckland and the rest of the country over the past 5 years. That rate of growth year-on-year for the rest of the country is heading down indicating the plateauing of sales for regions outside of the powerhouse of Auckland that is driving the overall market.


Property sales in Auckland starting to plateau

by Alistair Helm in ,


The latest property sales data from Barfoot & Thompson for September recorded the 4th straight month with sales were around 1,000. This level may be an early indication that the Auckland market may be reaching a new plateau as the seasonal adjusted stats show in the chart below.

Lets be clear this new level is a significant increase of around 24% as compared to the same period last year when seen over a rolling 6 month period. However as can be seen from the trendline the plateauing may have started. 

The current 6 month average (seasonally adjusted) would seem to be around 1,000 a month, that would take the current moving annual total for the whole of the Auckland region based on B&T average marketshare of 40% to 30,000 - this level is in fact the level of sales that were seen in Auckland during the majority of the period prior to the market crash in 2008. It would be therefore possible to infur that property sales may not continue to rise month-on-month during the rest of the year, they will still though post increases as compared to prior year.

It will be valuable to look more in detail at this situation once the national figures from the Real Estate Institute are released in the next week.

Property prices - Auckland

Turning from sales data to pricing the picture is pretty clear. Prices are continuing to rise. The chart below makes this abundantly clear.

The last 12 months has seen a very significant rise in property prices as represented by the sales of properties listed by Barfoot & Thompson. Now this is where it is important to make that point - this data is the sales of property from one agency in Auckland; albeit the biggest, with at times over 40% market share but still just one company. The other point is that the data in the chart is average sales price. 

The average sales price is not regarded by economists as a particularly reliable metric when it comes to house sales as extreme property priced sales can easily distort the data. The more reliable data is median price or better still stratified mean. Both of these data points are provided by the REINZ in their reports, again the September data should be available within the week so that will provide a better indication.

Having made that statement there is value in the Barfoot & Thompson data as a guide and examining the trend line it does provide an early picture, that whilst the actual average price of property sold by B&T in September was down slightly, the trend is most definitely upwards.


Property sales pass another key milestone towards recovery

by Alistair Helm in


The month of August saw 6,035 unconditional property sales across the country as reported by the Real Estate Institute. This represented a 16% increase as compared to August last year and continues to fuel a stronger property outlook as all of the 8 months of 2012 have seen year-on-year sales up between 14% and 37%.

The chart below tracks the annualised total of sales volumes and transaction value since 1993.

This total for the 12 months to August tips the annualised total of sales past the milestone of 70,000 sales. The last time the 12 month moving total sales was at this level was way back in May 2008.

The property market did witness a rebound in 2009 and edged very close to 70,000, with an annualised total sales of 69,629 in December 2009 before falling again down to the low point of April 2011 at 54,829. Since then the growth in sales has been consistent running a 17 month unfaltering trend to see an overall increase of 28% in total annualised sales top the new level of 70,065.

It is, as ever, important to recognise the difference between the current sales levels and those heady days of 2004 when sales were exceeding 120,000 on an annualised basis, equating to 10,000 sales a month - a long way removed from the current level of still just under 6,000 a month.