We are fortunate in NZ to be blessed with a rich and comprehensive database of property statistics. Many countries have to wait many months between data releases, which tend to provide quarterly trends. We have the benefit of insight into the property market with stunning regularity, all crammed into the first 10 days of each month.
However a common complaint is that the data is not consistent and it is presented using different metrics; for example median price, stratified median price, average price, valuation, seasonally adjusted truncated mean asking price, rental rates, to name but a few. So as a smart property buyer or seller it is important to understand what these metric can tell you and what you should pay attention to, to be ahead of the game.
There are 3 sets of data that I consider critical. These are property sales data (the measure of what is happening as a function of buyer activity), property listings data (the measure of what sellers are doing and how they judge the market) and then rental data (the measure of how landlords are pricing their rental properties).
Property Sales Data
This is probably the best-known sector of real estate data with both the Real Estate Institute (REINZ) and QV pitching their data to the market within days of each other. Data that on first impression appears similar, but on further investigation is somewhat different and the difference can be significant.
REINZ provides rich data on property sales, median prices and days-to-sell, across not just the major regions of the country but right down to clusters of suburbs. Sadly the full data set is not accessible online in a machine-readable format, rather it is published as a pdf with prior year and month comparisons.
The data is collated by the reported unconditional sales of properties by licensed real estate agents who are members of REINZ, submission (as I understand it) is not compulsory, but in spite of that it is very comprehensive, and its timeliness provides for the prior month insight within 10 days of the end of the month. The data goes right back to 1993 and using their online tools you can access databases for particular suburb clusters.
REINZ present the majority of pricing information in the form of median price, this is statistically appropriate as it ensures that extremes of sale prices within data sets don’t skew the data. However in preference to the raw median price I tend to focus instead on the Stratified Median price, this data set developed in cooperation with the Reserve Bank is sadly only published for the 3 major cities as well as the national figures. It is a far more accurate indicator of true price movements as it applies modeling to ensure that higher sales volumes in high price suburbs for example are normalized and thereby don’t result in an overall rise in prices.
QV produce a well-recognised set of statistics on the property market based on their rich database covering every house in NZ in their role as the government rating valuations organization. This database is updated on a daily basis by the transactions of settled sales as registered by LINZ. This process captures all property transactions irrespective of whether the transaction was undertaken by a licensed agent or a private sale (estimated at around 10% of all sales).
QV do not report selling prices, rather their business is valuation estimation and it is this index, which is published monthly. Their computational models analyse the actual sales prices for individual properties matched to prior valuations and thereby create an index of house price movements. This provides a good representation of trends of price movements rather than actual figures for property prices regionally or nationally.
One drawback to the QV data is that it uses a broad time period, each report is based on the prior 3 month’s settled transactions. This is further impacted by the fact that long settlement on some properties could mean the property sold unconditionally may not appear as part of the QV dataset for anything from 3 to 5 months. Despite this timing issue the trend indicators of price movements from QV are very useful and accurate.
Property Listings Data
Property listings data provides a vital insight into the supply side of the market and has only become available since the ascendency of the web as the definitive search process for buyers. The monthly data is provided by Realestate.co.nz in their monthly NZ Property Report published within a day or so of the start of every month.
The report details the number of listings coming onto the market in the prior month, the asking price of these listings as an indication of the sellers / sellers’ agent’s expectation, as well as the level of stock of houses on the market at the end of the past month. The report is very detailed in printed form and also provides the ability to download the full data sets with both raw data and seasonally adjusted data.
As the originator of this report during my time at the company, I believe the report holds a unique insight into the supply side of the market, as a key lead indicator of the market. As an example of this is the fact that the current shortage of listings was flagged as early as April 2011 in the report by which time there was a clear trend as to how this would lead to price pressure in the medium to long term.
One key data set within the report that I think is worth focusing on is the Inventory as a measure of available stock of property on the market. This is presented not in absolute numbers but as a representation of the number of weeks that it would take (based in current rate of sales) in theory, sell all of the houses on the market. Nationally this has fallen from a high of over 52 weeks (a full years supply) to now barely half that at 27 weeks.
I have recently taken these key numbers and produced what I call a Property Dashboard - this simple gauge shows where each of the 19 regions of the country are at, in respect of experiencing a sellers market, a buyers market or a balanced market.
Weekly rental rates are published from the Department of Housing and Buildings (now known as The Ministry of Business, Innovation and Employment)
Tenancy Bond database. This monthly data is published in the NZ Property Investors magazine and provides great insight into the state of the rental market.
The Agency has recently opened up their data sets going back to 1993 by each local authority, so if you are keen to play with spreadsheets to analyse the data this is highly valuable.
Trade Me has also started providing some valuable data on the rental market. It is sadly rather infrequent, being on a quarterly basis and not as detailed as many would like, however I am sure that with the passage of time they will provide richer information, as they hold an incredibly rich data set of listings, rental prices and transaction pace, covering every property type, size and location.
Having begun by saying that we are fortunate in NZ to be blessed with a rich and comprehensive database of property statistics, I would actually conclude by saying that we are actually lacking real in-depth information and statistics. In a recent article I posed the question "Do we really have the property data we need?" I hypothesized as to what type of statistics would be really valuable, for example how would it be if we could for example understand:
- What is the percentage of residential property buyers that are sold to first-time homebuyers, typically what are they buying, where and for how much; how has this changed over the years?
- Equally imagine if we could understand how many properties in Auckland are bought as investment properties and how many of these are managed privately as opposed to being managed by a property manager?
Such rich data would provide so much more insight and assist consumers, economists and many other businesses to better plan and offer services.
This data is not beyond the bounds of capability. Real estate agents or the Real Estate Institute could capture all of this data in its capacity as the organization representing the industry and its professional practioneers.
This article is also published in the May edition of the NZ Property Investor magazine