The New Zealand Herald judged to have misled consumers in Herald Homes Advert

by Alistair Helm in

The Advertising Standards Authority (ASA) this week published its Complaints Board’s decision against NZME., publisher of the NZ Herald. The board adjudicated that the Herald Homes advert claiming that “On average properties sell for 20% more when the marketing includes the Herald Homes…” was likely to mislead consumers.

I filed the complaint with the ASA following the articles I wrote in October when the advertising campaign commenced (Can advertising generate extra sales price for property / Sale price premium cannot be claimed by advertising alone). I should highlight that at the time I was self-employed. Subsequently I have taken a role with Trade Me Property and this complaint is in no way related to Trade Me Property.

I submitted a detailed complaint to the ASA supporting my claim that the advertising was misleading and potentially deceptive. I judged it to be misleading, as the advertising made no reference to the fact that the research upon which the advert was based only examined million dollar plus homes over a selected six month period. I further stated that their claim could potentially be deceptive as the analysis of the data, whilst proving correlation between advertising and selling price, could not definitely prove causation between advertising and sale price given the multitude of factors and variables involved in selling a property.

The outcome is gratifying – the complaint has been upheld and the NZ Herald has been found to have undertaken an advertising campaign which was judged to be likely to mislead consumers. However, the process taken to reach this outcome and the remedies available to the ASA leave me feeling somewhat frustrated.

The ASA is an industry organisation which seeks to uphold industry standards but is unable to exercise any financial remedies or penalties. The options are limited to forcing advertisers to withdraw and cease to undertake such advertising, matched to a published retraction.

The NZ Herald, in their response to the complaint, stated that:

The Herald Homes advertising campaign has finished its run. It is no longer present on bus shelters, is not scheduled to run in any further print media, and has also concluded its run on all NZME digital channels such that it is no longer accessible online (eg, via

I consider this a poor excuse or justification. However the most surprising component of the response from the NZ Herald was their attempt to offload responsibility for the advertising to its research company (TNS Research):

TNS Research were (accordingly) asked to provide their confirmation that the claim and explanatory footnote to the advertising were: accurate; and capable of substantiation based on the research undertaken by them.

NZME received confirmation from TNS Research prior to publication of the Herald Homes advertising campaign, that the claim and explanatory footnote were accurate and statistically supported by their research.

In my opinion the NZ Herald has a responsibility beyond simply asking the research company for confirmation. The ASA Complaints Board found the NZ Herald had breached the Basic Principle #4 of the Code of Ethics. This found that the NZ Herald advertising had not been prepared with a due sense of social responsibility to consumers and society.

The advertising campaign is over and sadly the NZ Herald has achieved what it wanted to achieve – attempting to convince agents and vendors that the NZ Herald Homes advertising can deliver a 20% price premium over CV. Sadly that claim was misleading but the NZ Herald has banked any competitive advantage this has given them between October and December (the strongest listings period of the year).

My only wish now is that the NZ Herald and in fact all publications seeking to attract advertising dollars from agents and vendors take seriously their responsibility to act within the ASA guidelines and Code of Ethics and not to undertake misleading or deceptive advertising.



Price indications - agents cannot mislead

by Alistair Helm in ,

I was rather pleased to see this tweet from the Real Estate Agents Authority (REAA) today:

The statement is incredibly valid and prompted me to write as over the last couple of weeks I have heard from a number of readers about their frustration about the price search parameters on web searches on both property portals and real estate company websites.

An agent not only has to be accurate and must not lead around price expectation of sellers when discussing with buyers at open homes but also should ensure this mis-representation does not occur on web searches which are so critical given the vast majority of buyers search for property online.

To be specific the REAA on their website sets out the "Expected behaviour of Real Estate Agents"

Here are the statements that are pertinent to this issue:

Agents can’t withhold or give inaccurate information about a property

The agent is in contract with the seller and will always work on their behalf. However, they have an obligation to treat the buyer fairly, including not withholding, or giving inaccurate, information.

(I think this is important in the context around not withholding information, an accurate price expectation is information which when requested must not be withheld)


Agents can’t make unsubstantiated representations

Under the Fair Trading Act, it is an offence for an agent to make an unsubstantiated representation about a property. This means that an agent can’t make a representation about a property without having the evidence to back it up.

Agents must have reasonable grounds for making a statement (written or verbal) about a property - before they make it.

(I think that as each property requires a market appraisal undertaken by the agent for the vendor at the time of listing which provides an indicative sale price / price range then under the Fair Trading Act the evidence to back up any reference to price needs to reflect the evidence of this appraisal so the two should be aligned and therefore the search price online should be substantiated by this evidence)


Agents can’t mislead buyers and sellers about pricing expectations

The advertised price for the property must be in line with the pricing expectations the agent has agreed with the seller.  The agent should not mislead the buyer about the seller’s pricing expectations.

(I believe as I have stated that the search price range online is as valid as response to setting buyer expectation as is a verbal communication)

Property musings on Facebook - 14 November

by Alistair Helm in

Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.


Agents should not reveal identity of prospective buyers

New Capital Values demonstrate an archaic system

by Alistair Helm in

Today, the 10th November thousands of Aucklander's reached for their web browser to witness the reveal of their latest Auckland Council Capital Valuation for their property. Far from horror or celebration the universal reaction was of frustration. Frustration because the majority could not gain access to the web server to discover their latest CV.

This experience in my view is unacceptable in 2014. We live in a world of ubiquitous, almost unlimited computing power - a world where you can through services like Amazon Web Services spin up unlimited servers to power any scale of usage at a fraction of the cost of most traditionally owned hardware environment, and only pay when you need it - like today as Auckland could have done to save loosing their whole website .

This experience is for me a demonstration of how archaic the whole Capital Valuation system is. I have in the past written about how we should get rid of CV's as they are a wholly misleading method of establishing a value on a property. Well now I think the experience of not being able to find out the latest Capital Valuation on my property demonstrates how we should re-examine the whole process.

I am not going to get into the political issues as to whether or not basing local authority rates on property valuations is right or wrong - but let's just say it is a fair method. How then could we improve it? 

The problem is that re-assessing values every 3 years is mad. Thirty years ago undertaking a re-valuation every 3 years was the best that could be done as the process to assess half a million homes took 3 years. Today algorithms can re-assess valuations every day if required. Zillow in the USA updates the estimated valuation of 100 million homes every couple of weeks - they are not a government agency - they are simply providing this insight next to property for sale to assist home buyers. 

Core Logic which is contracted to provide Auckland Council and most local authorities with a re-valuation every 3 years has a dynamic algorithm which re-assesses the property inventory of the whole of NZ at the flick of a button. They provide dynamic services to banks who use this capability to ensure they are constantly aware of the state of their lending portfolio. This algorithm takes input every day from recent sales, building consent data and registered valuers. It crunches these data inputs to create a re-valuation, house-by-house, suburb-by-suburb, district-by-district. This is the origin of the QV monthly report into valuation changes in property.

So why don't Council's use a 3 monthly re-assessment of capital valuations. The data is held by Core Logic they can simply take a feed of that data every 3 months. That way the "reveal" of new Capital Values becomes a less dramatic news story - I know the media will be disappointed in this as they have had a field day over the past weeks leading up to the latest reveal. 

For homeowners this new process would provide a genuine public service and demonstrate equitable rating apportionment as the annual rates would be based on a far more current assessment of relative value.




A property website or 'The world's most trusted and vibrant home-related marketplace'?

by Alistair Helm in


Zillow held its inaugural Premier Agent Conference last month inviting over a thousand of their more than sixty thousand Premier Agents to a two day event held in Las Vegas. Described by CEO, Spencer Rascoff as the most important event of Zillow's 10 year history, the event itself speaks so much to what and how Zillow is and will develop in the future.

Zillow is in many ways a late starter to the global industry of property portals. When it launched in 2005, REA group in Australia (arguably the most successful property portal globally) was about to launch its international expansion and had been operating for 9 years and was generating A$34 million in revenue - just in Australia. It would take Zillow until 2011 to reach that level of sales and by then REA had powered on to revenues of A$238m!

Zillow though does have a larger pond to play in with a population of over 300 million, annual property sales of over 4.5 million and well over 1 million agents.

I watched the various reports and tweets from the conference and quickly became engaged with the approach Zillow is taking with its customers. It was beautifully summed up in the phrase "a website that has created an ecosystem for consumers, agents, renters, homeowners and lenders to interact around housing". The notion of an ecosystem is very appealing to me, as it is all about a platform. Platforms are the most powerful digital business solution. A platform can deliver a long term value in a space where people can undertake interactions and potentially create marketplaces that ultimately provide the revenue opportunity that all such digital platforms aspire to and must if they are to survive and grow.

Now Zillow more than many other global portals needs to nurture the revenue opportunities from agents as well as ancillary service because fundamentally the US model for property portals provides no income opportunity for subscription based listing services. The US has the somewhat unique MLS structure that effectively removes the opportunity of charging for listings. The model, that for REA Group generates over A$100m in annual revenues from 9,500 Australian real estate offices, amounting to 25% of total revenue. However Zillow and other property portals do not see agents as simply revenue sources, they recognise that the role of a property portal is inextricably linked and closely aligned to the agents. Agents are the advocacy platform for portals as well as the source of all future business. This thinking is what has driven the investment in digital services and customer relationship services entirely focussed on building that bond between the agents and the portal.

What is so appealing in my mind around all of this evolution is how far we have come in the property portal space from the early ideas of simply being advertising websites for the display of listings through into this idea of being a broader media site with listings, and then evolving into this far more engaging and enveloping concept of an ecosystem that provides support and value to all of the community. That is what Facebook has done for our social connections, what e-Bay and Trade Me has done for all types of retailers and what Zillow and the likes of REA Group in Australia and Rightmove & Zoopla in the UK are doing for their respective real estate community and all of the home related services.

Zillow shared at the conference their mission, a mission statement that they had not made public until the conference.

To build the world’s most trusted and vibrant home-related marketplace
— Zillow Inc

In my view we have collectively come a long way as a community. The community of digitally focussed and passionate supporters of the real estate industry who across the globe seek to support and lead the evolution of this industry and those millions of agents that operate day-to-day in the market delivering services to consumers. We have evolved from websites to ecosystems and marketplaces delivering greater services and value to the industry we support.

Here is the video summary of the Zillow Premier Agents conference - in my mind it was a milestone event in the history of the company and of this industry in the US and internationally.

Property musings on Facebook - 7 November

by Alistair Helm in

Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.

Better selection of property for sale than a year ago



Technology and its impact on the real estate industry

by Alistair Helm

I was recently invited to deliver a lecture to students at the Department of Property, University of Auckland Business School on the impact of technology in the real estate process. I thought having delivered the lecture I would share the content of the lecture and the slides as a synopsis of my thinking.

I chose as my title for the lecture this excellent quote I have used many times over the years when talking to real estate agents about the transformative impact of technology in their industry.

Agents will not be replaced by technology …. they will be replaced by agents with technology
— Peter Williams - CEO of Deloitte Digital (2007)

The principle here, as in other such talks is that the real estate industry is not in imminent danger of being replaced by a single technology solution that completely disintermediates the process and makes the role of the agent obsolete, but rather that the transformations in the industry will be powered and enabled by technology and the winners will be those agents who embrace such technology rather than fight it. In reference to technology the solution for agents is not to be found in the acquisition of hardware per se, but in the adoption of solutions which will largely be software solutions, applications and platforms.

At its core, my premise is that the real estate process can be segmented into five core components; analysing the impact of technology on each individually provides a richer insight into the likely long term impact on the industry overall:

Prospecting - the task of business development largely a referral and profile business requiring individual agents to market themselves and their services as unique and distinct brands in a largely undifferentiated marketplace of such services

Listing appraisal - that task judged to be of primary service delivered by all agents and promoted as a value-add free appraisal as to the market value of a client's property

Marketing - the creation and promotion of a client's property as a piece of marketing collateral, promoted across multiple platforms seeking to attract the widest audience of prospective purchasers

Facilitation - the herding and nurturing of those prospective buyers to stimulate interest and intent to make an offer to buy the property, overcoming objections and apathy to maintain interest by these prospective buyers

Negotiation - the capability to close the deal to the satisfaction of both the buyer and the seller such that the sellers expectation of price and conditions of sale can be met by the buyers acceptance to a price and necessary conditions


These five steps are critical in understanding and appreciating where the future vulnerabilities lie for the real estate industry and where the opportunities exist for those in the industry to embrace new technology based solutions that will likely provide greater efficiency or potentially challenge current processes.

In providing a backgrounder for my outline of these technology advancements I took a step back to examine where the industry has come from on the technology path; where it is, at this time here in New Zealand, and how that compares to international trends; and then finally to look forward to where the future might take the industry.

As a timeline I chose to step back to just 10 years ago. A short timeline to some extent but in the context of my lecture it represented a fairly significant period of change. At that time back in 2004 the process of real estate had not changed much for a couple of decades. The tools of the trade were a mobile phone and the executive car.

Agents were gatekeepers of all the data. Accessing that data at the time and place buyers wanted was simply not possible, as the nascent web offerings in NZ were limited to RealENZ offer with a large number of listings which simply amounted to descriptions with a pitifully few photos; and Trade Me with a very limited selection of private sellers. The advertising medium of choice at that time was newspapers and magazines. The print deadlines being the critical deadlines around which the industry pivoted and as a result property buyers as well who had to wait for the weekend paper. Agents were very reluctant to engage by email preferring the phone and person-to-person meetings.

The next ten years witnessed some step change technology introductions that have reinforced the web as the primary platform for real estate information and marketing.

2005 - the introduction of Google Maps was transformative, providing context to all properties in location terms, opening up the access to addresses on almost all properties. As today's date, of the 41,451 properties for sale  92.5% of them are displayed on the website of with an address - that still leaves over 3,000 without an address. However back in 2006 when this first analysis was done only around 36% of properties listed on had a displayed address

2007 - whilst images accompanying property listings did not miraculously start to appear in this year, it was a turning point when agents recognised and responded to the desire by buyers to seek out more listings online and require more images. In 2006 the average number of photos per listing on was less than two by 2007 it had ‘leapt’ to more than four, by 2010 it was 11 and by 2012 closer to 16

2009 - the emergence of social media was a new platform opportunity for agents with the ability to build online profiles and demonstrate domain expertise in their local market with insight and analysis of the property market at the hyper-local level. launched the blogging platform of Agent Voices and thereby enabled many agents to build their social profile, later supplemented by Facebook - naturally!

2010 - video was by then becoming more common although the early versions were somewhat meaningless video montages of the listing photos. The professionalism of videos has improved markedly over time as has the adoption; with many listings now incorporating a variety of video styles

2010 - probably more significant and in my mind more important has been the adoption of floorplans with listings. These really provide a clearer sense of context to complement the photos, just as maps did to the address 5 years before

2010 - whilst the launch of the first smartphone had occurred a few years earlier the first app dedicated to real estate and showing-casing the full portfolio of property listings launched in NZ at the end of 2010. The app quickly became the most popular means of browsing for property with more than 200,000 downloads to date

2011 - the natural evolution of simple classified listings to premium and to super premium listings occurred as agents recognised the value of enhanced profile which drove more exposure and enquiry and naturally became a key part of their marketing platform (well for some)

2012 - the tablet became a core platform and whilst there are various options, for my money the best experience (albeit compromised by limited listings) is still the

New Zealand lagging behind

Whilst all of the above provides a sense of a dynamic advancement of technology in the consumer real estate space, the fact is NZ actually lags woefully behind many markets in terms of innovation in the field of property portals. 

The global market of property portals now spans the globe with all major markets covered with competitive players offering rich services and providing rich rewards for the big media owners, shareholders and investors. The top 5 global property portals are now collectively valued in excess of $20 billion and the global market probably accounts for over $100 billion in revenues.

When it comes to platform options for viewing property in this digital age NZ can deliver iOS and Android apps but little else, overseas options now include wearables as well as every possile platform from Google Glass to Kindle.

User Design for many smart online global service offerings has come along way in just the last 3 years, we are used to continuous scrolling, responsive design and full width presentations - not though in New Zealand and not from our two property portals! We are experiencing 2010 technology, it needs a rethink and reinvention.

A simple tech capability somewhat ubiquitous across most of the property portals around the world is the ability to simply draw your own search area - using a digital pen with your mouse, you describe the location of choice selecting which streets to include and that creates a personal search area - far from being constrained by suburb boundaries.

And then of course we come to data - for many property buyers in many countries (particularly our natural partners - Australia, US and UK) access to comprehensive sales data by property with estimated valuations for every property whether for sale or not is the norm. This insight empowers buyers and enables people to have a clearer view of where they can afford to live, unbounded by the views of local agents. For New Zealand we at best have to rely on 3 year old Capital Valuations and at worst fork out hundreds of dollars for information which is actually public, collected for government bodies which are paid for by tax payers.


Future Gazing

Where are the key future developments in the digital transformation of real estate?

The richer more immersive means by which buyers will review properties for sale will come from the likes of Matterport and their excellent full 360 degree viewer allowing unlimited access to the whole property in the palm of your hand. We may go as far as to experience a total immersive experience through the likes of Oculus virtual reality to allow us to sense walking through a property and interacting with it.

The potential for the fully functioned digital transaction could emerge with professionally managed online auctions as is growing in the US with the company This company started out by auctioning distressed inventory of repossessed houses and now facilitates a wide variety of real estate transactions across residential and commercial property - and here’s the clincher, just as in fine art auctions, the buyer pays the commission.

It is likely that the components of real estate could be unbundled so clients choose from an ‘A la carte’ menu of options each priced in clear dollar terms rather than a bundled offering for a commission of selling price. Easy Property has just launched in the UK based on this model, it is currently only offering services to landlords but their intention is to move into property sales.

Those are just some of the future trends, there will be more. One inescapable truth of technology is that the new smart tech you think will change your industry will be overtaken by the tech you have not even seen yet!

So for real estate the best answer as to where the changes will most likely occur is to examine each of the 5 steps of the overall process and examine the likely transformations enabled by technology.

The likely disintermediation of real estate - Prospecting

The whole process of prospecting in the real estate industry is massively unproductive and inefficient. Too many agents fighting over too few clients to secure a listings for a commission fee that has to support the inefficiencies in the process. Technology will deliver a solution, it is happening slowly around the world as a large number of start-up companies seek to offer services to better connect sellers and agents, motivated by the recognition of value that agents ascribe to a new client, a client they don’t have to prospect for, but one that comes to them.

The core to finding and selecting an agent is all about data. What sellers want is to find an agent that has sold a house like theirs, recently, in the same area. An agent that achieves a fast sale at or above the market rate. An agent that is well regarded and has the skills and experience to deliver that sale. All of these signals are delivered through data points that exist based on their work experience. Most of the data is generated through property portals and that is where this service of matching clients with agents is most likely to emerge in the coming years.

What is clear is that the days of door-knocking and leaflet dropping are on the way out. Just as buyers turn to online services to find property for sale, so sellers will turn to digital services to find the right agent (or more likely shortlist of prospective agents) to service their needs in selling their home.

When it comes to demonstrating the proof of this approach there is no better model to look to than Redfin in the US. They are a real estate company with real estate agents. However they are the most data driven real estate company on the planet. You can review all their agents by metrics of the hard data of sales performance as well as the soft data of customer reviews - objective evaluations based on professional reviews rather than curated testimonials. Redfin is smart, it employs smart tech enabled and tech literate agents who are demonstrating the ethos of “Agents will not be replaced by technology …. they will be replaced by agents with technology”.

The likely disintermediation of real estate - Listing Appraisal

This segment of the process is the most vulnerable as in many countries sellers don’t rely on agents to provide appraisals for property valuations, online services provide the insight about all property sales in the area of interest, coupled with smart algorithms that deliver estimated valuations which with self-learning feedback get ever more accurate. This technology revolution is shrinking this component of the real estate process and reducing its value.

The likely disintermediation of real estate - Marketing

In many ways the marketing of property has already been disintermediated as the agent relies on other parties to deliver the components of the marketing. The photography is outsourced with professional photographers undertaking an ever greater proportion of listings as this has been proven to deliver serious results. Signage whilst in this digital era, is still a critical component of marketing. As for the core of marketing, the presence on property portals remains the most important platform despite the claims of print media. For New Zealand agents the challenge is that fact that Trade Me Property delivers a level playing field that allows private sellers to compete directly with agents and achieve the same level of awareness and leads - that is the indisputable demonstration of the extent to which this part of the real estate process has already undergone disintermediation.

The likely disintermediation of real estate - Facilitation and Negotiation

Facilitation shutterstock_154157105.jpg

These final components of the process of real estate have always been and in my view will always be, the true value proposition of the role of a real estate agent. The persistent and persuasive ability to bring interested parties together, to maintain that interest, to facilitate the contractual proposal of that initial offer and to motivate the parties to negotiate to a successful end result of an unconditional contract is at the very heart of the real estate process. It is not a process that is or could be outsourced to a digital solution. It is by its very essence the fundamental reason why so many private sellers having succeeded in gaining interest and inspections in their property only to see it fail to sell. It is just too hard to undertake the facilitation and negotiation of the real estate process without the professional, detached and experienced capability of a real estate agent.

That is why it is ever more true that the future for the real estate industry lies in the hands of the successful future breed of agents that embrace technology and allow its transformative capability to supplement their core skills and to drive greater efficiency which will at the same time deliver greater value and appreciation from clients. That is the world of opportunity for those agent. For those that fight it, and defend yesterday’s methods, their client base will dwindle and they will be replaced by this need breed of agents - smarter, savvier and tech enabled. 

The slides from the lecture are presented below. Please feel free to quote and share the presentation. I am grateful to Deborah Levy, Associate Professor and Head of Department at the Department of Property, University of Auckland Business School for allowing me to address her students. It was a pleasure and a privilege.

Could The Block series 3 be a leap too far?

by Alistair Helm in

I must confess I had not been gripped by the TV series The Block, I am more a Grand Designs person. However I can see the appeal, and based on the level of interest evidenced from the recent open homes, TV3, the production company and the sponsors must be delighted. It appears to be the golden goose that just keeps on delivering.

However I hate to be the Grinch to rain on their parade but I fear that Series 3 of The Block is not going to end as happily as the first two series with a successful clean-sweep of auctions on the night. I think the 3rd series is going to be a leap too far and one, if not possibly all of the properties may end up not selling at the reserve and thereby being passed in.

If you need a reinforcement to this view then look no further than the most recent Australian series of The Block in which apartments in Melbourne's suburb of Prahran have struggled to meet the reserve set at the auction as the market they are competing in is flooded with similar apartments. This recent article provides a vital insight into the challenges the Australian series has faced in marketing these very unique apartments.

For NZ the issue for these 4 new properties is not in my judgement the same as Australia. It is not down to marketing to standout in a crowded market, the issue is simply there is insufficient demand.

The original series of The Block NZ in 2012 delivered 4 renovated houses in Takapuna sold at prices between $800,000 and $961,000. The second series in 2013 delivered 4 renovated houses in Belmont sold at prices between $970,000 and $1,126,000. The current 3rd series has 4 renovated houses in Point Chevalier with a price expectation of $1,450,000. This figure is the search price indicator from the website. This price level is 40% higher than the last series and puts these houses in a wholly different segment of the market.

This price expectation is a big ask for 4 properties in the same sub divisions to be sold at auction on the same night. To find a single buyer for this type of property in Pt Chevalier at this time, at this price point is probably quite likely. To find two is less likely and to find 4 is a huge ask in my opinion. Simply put, the higher the price point the smaller the market demand and the pool of prospective buyers. Add to this the media profile which whilst great for a TV show does have the ability to be a negative factor for potential buyers, who value privacy when looking to spend over a million and half dollars and may well not to be associated with a TV make-over show when there are other 'new' renovations on offer. All of these factors drive a higher likelihood of a less impressive auction event.

To prove my point let's examine some data. Barfoot & Thompson kindly provide insight into monthly sales by price level. They as the largest real estate company in Auckland account for around 40% of sales so therefore it is possible to estimate the average number of property sales across Auckland at each price point, reflective of the properties for sale during each series of The Block.

So based on the sales data at the expected price point of $1.45m there are about a quarter the number of buyers than those at the $800k to $1m bracket of the 2012 series.

A house purchase at $1m is a serious consideration, at $1.45m it is ever more of a significant consideration. These prospective purchasers are not super-fans of the TV series buying a momento of the series to show off to their friends; they will be property buyers, buyers who are discerning, judgemental, critical, cautious and private. 

Time will tell, but I will watch as will many hundreds of thousands of viewers on auction night to see if they really can sell over $6m of real estate at a live TV auction.

Auckland property - a price too far!

by Alistair Helm in

I read with interest the weekend opinion article by Duncan Garner in the Dominion Post titled “I’m an instant millionaire - but can’t afford my house”.

I have been following Duncan’s commentary recently on his radio show and online - his focus is the un-affordability of Auckland property. He comes with a great perspective having lived in Auckland for only a couple of years, moving up from Wellington and thereby being able to make relevant comparisons. I respect and admire his personal crusade as he is right when he says “If you want to buy cheap (and "cheap" in Auckland is $500,000) you have to head way, way out west - or seriously south towards the Bombay Hills”. Auckland property has risen in value by 37% in the past 3 years, 44% in the past 5 years and 83% since 2004.

However I believe there are some alternative perspectives to his views to both the problem and the perceived solutions as well as some corrections to some of his assertions. Here are my responses to his article.

Duncan states that “the value of my home soared by 58 per cent - up by $268,000 over just three years” - this is a gross over simplification. The value of his house on paper will only be accurately assessed by a property valuer. The quoted 58% increase refers to the median increase across all properties in the New Windsor suburb, the individual local authority capital valuation for his property will not be made public until the 10th November, even then that figure will only be a computer generated valuation. The true scale of the increase in value of any home is only ever realised when you sell. Every other number is simply speculative.

Duncan makes the comparison of Wellington properties. Far from selling way above their CV, they are actually selling below their CV. No surprise here. The fact is whereas Auckland sale prices have increased as cited above, Wellington have barely moved. Wellington property has only risen in value by 4% in the past 3 years, 4% in the past 5 years and just 45% since 2004. The local authority assessed Capital value is based on recent sales and therefore if recent sales prices don’t experience inflation then nor does CV’s.

The contention of Duncan’s article is that the Auckland property problem is one of supply and demand. In someway’s in my view he is right and in someways he is wrong. Demand is what is driving the property market. Without demand there would not be competition and that is what inflates prices. However the supply problem is less significant.

If Auckland had an acute shortage of property driven by the rise in population the issue would be seen in genuine demand for any housing, right across the board - property for rent and for sale. The fact is there is not excess demand for rental property as demonstrated by the inflation of property rents in Auckland rising by 9% in the past 3 years, 20% in the past 5 years and only 35% since 2004. These levels are only barely above inflation and therefore show no impact of demand.

Auckland’s property price inflation is the result of speculation and an overall increase in the ability on the part of property buyers to pay that extra dollar to buy the house they want to live in or invest in. Auctions for property that see active competitive bidding are not attended by people without a house looking for somewhere to live. They are populated by people with a house looking to buy another house to replace their current one or a further property to invest in. These buyers are making decisions that are a mix of rational and emotional triggers that drive then to bid an extra $10,000 / $20,000 / $50,000 more than they thought they would. That sale price then becomes the new ceiling by which the next property is launched onto the market and the inflationary pressure persists. 

The fuel for this property price inflation is a ready access to funds and cheap funds. The past 5 years have seen the lowest mortgage rates that NZ has ever seen in modern times and whilst the recent LVR policy has stifled the market to some extent, the demand has simply switched from property owners to investors.

Duncan is right when he says that “Auckland needs to build 13,000 houses a year to keep up with demand - this year it won't crack 7,000, and apparently we're booming” - we need more houses. However this short fall in construction is not the problem and will not be the solution. The solution lives in the financial component of property market - the access to and the cost of finance. That is what has driven this recent property price boom as it did between 2002 and 2007.  

The industry 'circles the wagons' around

by Alistair Helm in

The real estate industry has been rallying around their industry owned website since the radical price change implemented by Trade Me Property a year ago, in a manner somewhat akin to circling the wagons. 

The resultant boycott, although somewhat patchy on a regional basis, has seen the relative strength of Trade Me Property slip from what must have been 100% of licensed agent’s listings to around 75% - a figure that does not seem to have changed much over recent months.

The real estate industry may judge the initiative a success. However the messaging within the industry around the role of the industry owned website may need some refining as a recent video by a loyal and passionate real estate licensee shows.

The video entitled “Support !“ is a somewhat tongue-in-cheek news alert to fellow real estate agents which uses the analogy of “not putting all your eggs in one basket”.

Here is the script of the video:  

Hi, I’m Dave Umbers, I’m a real estate agent, salesperson, licensee, principle. Short message for you all today.

Our industry needs your support, our industry is, these eggs here they represent our listings, if we give them away to someone else to look after we loose control of those eggs. So, keep our own eggs in our own basket by putting them all on Your business will flourish, our industry will have a future, and everybody will be much much happier.

I’m Dave Umbers, please, please I urge you, this is our website It’s the goose that lays the golden egg.

Whilst Dave Umbers begins the video with a statement that “This message is unsolicited” the intention is clearly to spread the word widely within the real estate community and seek unified support to bolster the standing of the industry site. 

I find his analogy of the egg basket very interesting. To suggest that placing listings on Trade Me Property is in someway akin to putting all your eggs in one basket is in my opinion naive at best. The real estate industry continues to try and convince their clients that the print media publications from the Christchurch Press, to the NZ Herald and from the Dominion Post to the Property Press are the best form of advertising flies in the face of this characterisation of Trade Me Property. Either the real estate industry genuinely believe online is the best form of advertising or they don’t - they should not speak with forked tongue!

I further find the reference to “loose control of those eggs” equally fascinating. These ‘eggs’ as Dave describes them are adverts for their clients listings, nothing more, nothing less. Adverts that are created under an agreement with those clients to act in their clients best interest to successfully sell their home. So how do they ever imagine that they are “loosing control” of these listings as adverts. The agent has a legal contract in the form of a listing agreement providing them surety to exclusively provide services to their client in the sale of their client's home which includes among other things advertising. So could they possibly think that Trade Me Property is taking control and endeavouring to null and void that agency agreement?

The video somehow portrays the website of as some form of industry foundation using the phrase the “goose that lays the golden egg”. I am sure many in the real estate industry know full well that is not a charitable foundation. It is a private company and its shares are held in part by individuals or companies who are not the subscribers or customers of the website and who one day may well decide to profit directly from the website in the form of profits or sale. So the phrase “the goose that lays the gold egg” may well be prophetic as it may turn out to be the nest egg for some of those shareholders one day to the exclusion of the likes of Dave Umbers and others of his colleagues across the country.

The final reference made to the benefit of placing those listings exclusively on providing the industry with a “future” is fairly dramatic. Does the industry really fear their own viability as a result of an advertising platform changing its pricing model? Does the industry not believe that they deliver value to their clients beyond the choice of where to advertise a property for sale? I do. I believe that real estate agents deliver significant value, unique value in the aspects of market knowledge and intelligence, skills of facilitation, negotiation and that persistent ability to work tirelessly to deliver a positive outcome for their clients. Choosing where to place an advert and worrying about the cost of that advert at $149 pales into insignificance as compared to the overall service they collectively deliver 75,000 times a year.

Sure having an industry website is great. Many of their colleagues in other countries around the world wished they had an industry website, but those colleagues are not fearing their business future over a website platform and how much they charge. Advertising whether in the form of print media or online has always been a part of real estate. Whilst I was not involved in the industry 20 years ago but I am sure there were times that agents were up in arms about the annual increase in fees charged by the NZ Herald, The Christchurch Press, the Dom Post and Property Press. I am sure they felt blackmailed by the then media at the time. Equally I am sure in 20 years time the real estate industry will be up in arms about a media cost for reaching an audience. In that future it may not be Trade Me Property, it maybe Facebook or some future media platform, who knows?

The key thing to remember here is that buyers need to find out about property for sale. Agents need to represent their clients' properties to as wide an audience as possible. To reach that audience they have a professional duty of care to use all and any media that can deliver that audience. In today’s world that is online and for NZ online has to include Trade Me Property as well as My view would be never put all your eggs in one basket when it comes to advertising whatever the colour of the basket. Always provide clients with options of different advertising platforms.

Property musings on Facebook - 31 October

by Alistair Helm in

Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.


When Hollywood starts making movies about real estate - then you know the market has peaked!






Our fixation of property as an investment is not healthy

by Alistair Helm in

The most popular story on the NZ Herald today is the "investor" who is selling his land in South Auckland for over $40m - having bought it in 1993 for $630,000.

By his own admissions he did not buy it as an investment - merely for his turf business.

The story is garnering huge readership and I would assume a lot of people will be associating this to the huge rises in property prices we have seen over the past few years and the extensive media coverage recently. Many may be wishing they had invested in land and equally they may be thinking about the next opportunity to buy land or property. 

It strikes me our fixation on property as the focus of investment is so narrow minded, and as many people too often comment a drain on the economic potential as it locks up investment dollars in unproductive assets.

There are a number of things that frustrate me about the coverage of this story.

The story is headlined as 'Investor sells land worth over $40m' - he states he was not an investor - just a business person making a business decision.

It is a single story of a single person who had $630,000 to spend on their business in 1993 - allowing for inflation that would be equivalent of over $1m today - no small sum. His options were many - he could have invested the money in many ways but he chose to invest it in growing his business. That part of the story seems to be overlooked as the focus is all about the price of land and the great investment return it delivers.

The inference of the story is that $630,000 into $40m is a stellar return - 40 times over 21 years - seems good. But hold on; if that sum had been invested in a safe and secure bank deposit it would be worth $2.3m today. So the $40m sale is actually a 20 times return over the average cost of capital rather than the simple view of a 40 times return that the original calculation shows.

A 20 times return or even a 40 times return is not stellar in the context of business investment. A 100 times return is stellar in business but unheard of in property or land investing. Investing in business is all about early stage investing - believing in the business. 

A great demonstration of the investment potential was coincidentally actually reported in the Herald today but does not capture the headlines. Sadly business stellar performance and investment just never makes the headlines.

Orion Healthcare is preparing for its IPO - launched in 1993 by its founder Ian McCrae the business is a stellar example of kiwi tech capability. It along with the likes of Xero and Vend are trailblazing global software solutions that are the best in the world in their respective marketplace and in the process creating billion dollar companies. Orion is likely to IPO at a valuation of $800m  - not  a bad return on the investment made by its early supporters and founding CEO who holds the majority of shares in the company.

This type of business is what we should see showcased  in the headlines to provide stimulus to the next generation of kiwi kids, entrepreneurs and investors rather than articles about perceived wealth in land. 

Property musings on Facebook - 24 October

by Alistair Helm in

Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.


1st home buyers should look to apartments

Sale price premium cannot be claimed by advertising alone

by Alistair Helm in

Last week I challenged the claim made by the NZ Herald that the power of Herald Homes print advertising added an extra 20% to the sale price of property featured in Herald Homes. I wrote a detailed article "Can advertising generate extra sales price for property?" challenging their assertion which I firmly believed was misleading.

I wrote to the NZ Herald to request answers to questions regarding the research, in order to enable me to better understand the research they quote in support of their claim. This was their response I received :

The research was carried out on our behalf by TNS Research, a well-respected global research provider.

TNS purchased a list of recently sold properties from CoreLogic – all properties were residential dwellings in the Auckland area (Franklin to Rodney), and had sold in the most recent 6 month period (1st August 2013 – to 31st January 2014) for over $1 million. This list contained fields for address, land area, dwelling area, number of bedrooms, CV, sale price, days on market, agency and agent.

This list was then supplied to the relevant agencies to populate with marketing data for each property. We asked for spend by media options (Herald, Property Press, TradeMe, etc.), open home visits, enquiries and numbers of auction bidders where relevant. This took a reasonable amount of time to collate but resulted in a completed list of 252 properties. Success measures were based on:
· Sale price to CV ratio
· Premium achieved (sale price minus cv)

This allowed TNS to look at similar properties (based on the data from CoreLogic) that included / didn’t include Herald Homes in their marketing mix (based on the additional agency data). Our advertising is based on the results of this analysis. We are absolutely confident in the methodology –as we have based our claims on actual sales and market data.
— NZ Herald : Brad Glading, Head of Research & Insights : NZ M & E Ltd 9 October 2014

This response is certainly illuminating. I have no problem from a research perspective as the sample size of 252 properties is sufficiently robust and the methodology and factual basis is without question. The one issue I do have is that they chose to limit the sample to only those properties that sold for over $1m. This fact is not detailed in the supportive advertising when disclosing the research. It should be disclosed as in my mind it creates a bias in the advertising campaign as people would rightly believe the claim applied to any property sold with Herald Homes advertising.

As a point of reference and context. Using Barfoot & Thompson sales data for Auckland $1m + property sales represented just 1 in 8 of all property sales in the period from August 2013 to January 2014. Therefore this selective sample set of $1m + sales is actually a small fraction of the market. 

Far more important than the bias of the sample set is the belief by Herald Homes that the premium price achieved at sale is solely due to the advertising. The data they have analysed certainly shows a correlation between premium sale price and advertising BUT their assertion is that the advertising is causing the resultant premium sale price - this is not provable.

The NZ Herald have fallen into the classic trap of believing that "Correlation implies causation" where in fact the opposite is true. The fact is that a correlation between two variables does not necessarily imply that one causes the other.

The fact is there are just too many variables at work in the factors influencing the sale of a property for any one component to be isolated to be proven to be the cause of a sale price premium. I am certain that with the same set of data Trade Me could argue with confidence that advertising on Trade Me would result in a sale price premium or that auction sale process caused a premium or that real estate agents with blue logos caused a sale price premium.

On a more serious note I believe that there is a alternative hypothesis to explain the results of the research undertaken on behalf of the NZ Herald.

Alternative Hypothesis

 A key factor in the Auckland property market over the past few years especially of property  sales value over $1m is the prevalence of inner city renovated properties. These are properties which have achieved significant premiums over their respective CV due to the substantial investment in renovation of many hundreds of thousands of dollars. I detailed this situation in an article from earlier this year "Property statistics can be misleading".

I believe that such properties which have been renovated and then come onto the market attract a higher level of marketing investment which clearly will involve the Herald Homes together with other advertising in print and online. These properties also attain a higher margin over CV because effectively they are new homes and the CV relates to the former home on the site. These type of properties are more than likely to be skewing the results of the research and creating the correlation.

To prove my assertion I undertook a detailed piece of research of my own. I took the inner city suburb of Grey Lynn and with the assistance of a friendly agent accessed the CV and sale price for a total of 62 properties sold in the suburb between August 2013 and January 2014. Of this total, 46 properties had a sale price in excess of $1m. I then went through these properties one-by-one to identify which had been sold following a renovation. There were 16 properties which had been renovated.

Here is the resultant sale price premium for renovated and non renovated property compared to CV.

Renovated properties: 16 - average sale price over CV $403,125

Un-renovated properties: 30 - average sale price over CV $335,826

The margin is 20%! 

So I could quite legitimately say that the 20% premium claimed by the NZ Herald as attributed to the power of Herald Homes advertising is as likely to be the result (in the case of Grey Lynn) to be down to properties having undergone a renovation.

I judge that the NZ Herald has leapt to a interpretation of causation from their commissioned research simply by identifying a correlation potentially the result of significant renovations and therefore the advertising claim is without foundation and therefore fundamentally misleading.

One property does not a market make!

by Alistair Helm in , ,

Last week somewhere around 1,400 homes were sold across the whole of New Zealand. In Auckland that number amounted to around 530. The vast majority of those properties would have been sold in a traditional manner with a face to face protracted negotiation between a seller and a single buyer facilitated by an agent eventually leading to a signed unconditional agreement. Most of those properties would have likely been on the market for many weeks or months before the buyer approached the agent and started discussing an offer. None of these properties were of any interest to the media as none of them makes for a headline story.

The single property sale from last week  that did make an interesting story and made the front page from among these 1,400 was the sale at auction of a Grey Lynn villa which sold for $3.28 million and as the NZ Herald rather simply implied "a staggering $1.1m leap since 2012"

The fact is that this property did sell for $2.12 million in April 2012. It was at that time a brand new house - a beautiful reproduction of a Bay Villa - a large house with a pool, but without much garden and no garage. I took the opportunity to view the property at the time and could not fault the craftsmanship and attention to detail. It was located interesting right next-door to a rather shabby rental property.

Just over 2 years later and without any improvements or additions (although with a considerably improved neighbouring property) it sold at auction for $3.28 million.

I did not attend the auction and I would love to hear from anyone who was there. My assumption though is that there was significant competitive bidding that pushed this price to this winning bid.

The fact is as I am sure you all know, is that this property sale is not reflective of the market. There will always be, just as there have always been, 'Outliers' - property sales for which conventional wisdom and financial logic shoot straight out the window.

The sale of this property at this price says nothing about property prices in general and certainly cannot drive any view that this is indicative of prices in Auckland or in Grey Lynn. There is though something that this sale does in my opinion tell us.

It shows us that in Auckland we have a global city, a vibrant dynamic city. A city that is attractive to talent and wealth. A city where those with capital to invest see a bright future. This property sale is a more important pointer to the future economic health and wealth of this country than to any view as to trends in the property market.

This property was bought at a price that I would challenge anyone to try and convince me was not far more than any respect registered valuer would have apportioned to the property. A significant amount over the valuation. That amount is the result of a buyer with the capacity to pay and the willingness to pay "what ever it takes" to secure this property. This is a unique property and the buyer wanted it and was prepared to pay that price to get it to the exclusion of anyone else. At that price level this was not a pre-approved mortgage borrower worried about servicing a large mortgage. I would believe this buyer  has the financial wherewithal to buy this outright with no borrowing. This is the confident decision of a buyer who knows what they want and they can afford to pay that price. This sale is a great indicator for the future of our country and has nothing to do with the property market.

Property musings on Facebook - 17 October

by Alistair Helm in

Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.

Latest commentary on the property market

Can advertising generate extra sales price for property?

by Alistair Helm in

  • If a TV company were to say to an company - if you buy this campaign you will see a 20% increase in sales - you would not believe it?
  • If a radio network were to say to an restauranteur - if you buy this campaign you will see a 20% increase in sales - you would not believe it?
  • If a real estate agent were to say to you as a seller - if you buy this campaign you will see a 20% increase in the selling price - you would not believe it?

So why would you believe it when the NZ Herald says - if you buy a campaign in the Herald Homes you will see a 20% increase in selling price?

Well that is exactly what the NZ Herald wants people to believe with the new advertising campaign it has started

To be fair and accurate they are not, as the headline says claiming that by using Herald Homes that you will see a 20% higher selling price. Although these banner ads you can read above suck you in with this ambitious claim!

What they are saying is that if you use Herald Homes then on average the premium of the sale price over the CV of the property will be 20% higher than for a property without the Herald Homes - as ever the small print tells the real story whilst we are seduced by the headline!


So if I am correct in this assessment, this is the scenario they are claiming based on the much promoted Grey Lynn 'dump' - its CV was $690,000 and it sold for $1,075,000 at auction on Wednesday. So Herald Homes is claiming that if this property had not been in the Herald Home (which it was, as well as TVNZ, TV3, Stuff etc etc) then it would have sold for 20% less than $385,000 margin over CV - effectively without the Herald Homes a sale price of just $998,000. So the claim in this case is that the advertising in Herald Homes boosted the sale price by $77,000! - That is some claim. Clearly if this were to be believed then the investment of c. $6,000 a page would be money well spent!

The advertising material to support this ambitious claim references to a "TNS Research 2014" as the source of the claim. I have written to the NZ Herald with questions about the research and to seek to obtain a copy.

I cannot believe this claim as the fact is there is no such thing as a 'control' environment when it comes to property and any claim to state that this method of sale, or that agent, or this advertising will achieve a higher price is unprovable.

To be able to in any way even test this hypothesis you would have to analyse a sample group of properties in a similar area of the country across a variety of price points using different selling methods - some of these properties would be advertised with say Herald Homes and Trade Me /, some just Herald Homes and some with no Herald Homes and just online.

I can see no possible way for any seller to be happy to participate in this type of 'research' - every seller wants maximum exposure and there is absolutely no way of isolating the impact of Herald Homes from other factors such as market demand or online premium advertising or any number of other factors.

I will wait with interest to see if the NZ Herald respond to my request and also to see if they continue with this advertising. I believe that this advertising proposal breaches the code of practice of the Advertising Standards Authority in regard to misleading and potentially deceptive advertising claims. 

Same data / different story

by Alistair Helm in ,

I remember hearing somewhere that it was bad news that sold newspapers - apparently not so when it comes to property!, or so you would imagine if you read the recent headline from the NZ Herald detailing the September results from Barfoot & Thompson.

The headline: "Auckland house prices rise to a record, as more million dollar homes sell".

Reading the article after I had reviewed the numbers from Barfoot & Thompson's report on their website got me thinking. How different the article and quite possibly the headline might have been if the reporter had reviewed the data rather than just the press release.

Here are the first 2 paragraphs of the article as published:

Auckland house sales rose in September, snapping three previous months of decline, as more houses with a $1 million price tag pushed the average house price to a record, according to Barfoot & Thompson.

The number of sales rose to 959, from 909 in August, although below the 1,105 sold in September last year, Auckland’s biggest realtor said in a statement. The average sales price rose 3.8 percent to a record $738,876, and was 12 percent above last September’s average house price.

No let me using the source data from Barfoot & Thompson September report and provide an alternative 2 paragraphs:

Auckland houses sales continued to fall in September, the 8th consecutive months to see sales fall on a year-on-year comparison. Significantly sales of properties in the $400,000 to $600,000 price range saw falls of 22 percent.

The number of sales at 959 were 13 percent below September last year, Auckland’s largest realtor said in a statement. The median sales price continues to go sideways at $635,000, a trend that has been seen for 4 months now since a peak of $645,000 was reported in May.

The facts are simply the facts. It is just that the NZ Herald decided to copy and paste the press release from Barfoot & Thompson and I chose to spend a bit of time looking at the key facts. 

When it comes to reporting on the property market and presenting facts there are some key points to bear in mind that are critical to helping make a more informed decision as to the article:

1. Sales data is only relevant when compared with prior year. Property sales are seasonal. There is no value in comparing one month with the prior month unless it is seasonally adjusted data. Here is the representation of Auckland sales by Barfoot & Thompson to demonstrate the state of sales:

2. Average sales price is not an accurate and trusted measure in property sales reporting. The range of property for sale especially to the high end of value can have a significant impact on the average price. Let me show you. Lets say that the September 2014 sales had been the same - 959 but instead of 161 sales over $1m there had been just 146, 15 less properties sold over $1m (that 146 sales is how many properties sold for over $1m last September) and then lets say that an extra 15 properties sold at say $700,000. This scenario would have seen an average price of $710,000 - that is $28,000 less than the actual all for the sake of 15 properties! - that is how misleading it is to quote average prices.

3. Median price or better yet the Stratified median price is the most respected and trusted method of tracking house prices. Here is the median price for Auckland properties sold by Barfoot & Thompson measured by median price which shows the levelling off.

4. Real estate companies have a vested interest in presenting favourable articles based on statistics. They want to be seen as selling more than other companies or reporting higher prices or indicating that it is a great time to buy or a great time to sell or that there is a shortage of listings or a massive selection of listings. All of which as you can judge are often conflicting situations, 


As a final thought, researching the quote that 'bad news sells newspapers' I came across this article from The Guardian ( a media source I trust) who in a 2007 article on just this subject made the observation "peoples' interest in news is much more intense when there is a perceived threat to their way of life". It got me thinking - of course rising house prices, especially at the level they have attained in Auckland are what might be thought of as a "perceived threat to their way of life" - so maybe in the case of property news good news is actually bad news and the team at the NZ Herald are the smartest guys in town!

Property musings on Facebook - 10 October

by Alistair Helm in

Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.


First signal of poor September sales