Evidence To Predict Property Market Is Warming Up
21 August 2008
Embargoed until midnight
Enough Evidence To Predict Property Market Is Warming Up
Calling a turning point in a market is a risky thing to do, but I’m going to boldly say that there’s compelling evidence the property market is warming up.
I began looking to see if there was any concrete evidence to support a sudden but steady stream of agents telling me they’ve sold all their listings, they need more houses to sell and they’re busy again.
Multiple sources of data were analysed
Website visitors have increased to same levels as boom period ‘07
Analysis of the number of NZ computers visiting real estate websites found an average of 325,000 sessions per week which is pretty much line-ball with the same period last year when the pace of the market was considerably more active.
Reduction in Inventory + plateau in sales = imminent market upturn
For the third straight month the number of residential properties for sale on www.realestate.co.nz has fallen. At its peak in April there were 65,716 homes on the market compared to just 60,150 in July.
That coupled with the unseasonal increase in house sales in July and the typical lag between listings inventory and sales of between 1-2 months points to an imminent upturn – if usual trends apply we will see the evidence in August and Septembers REINZ statistics.
The graph clearly shows the lag between inventory and sales – note the market’s turning point in July 2007 when sales started stalling and inventory started rising.
Email enquiry is up!
The number of email enquiries forwarded to real estate agents from www.realestate.co.nz from interested and genuine buyers has grown markedly, up 20% on this time last year.
This statistic is relevant because these emails that may present as a simple request for more information are actually the starting point to an eventual sale.
PREDICTION STOPS AT PRICE
What this analysis doesn’t interpret or attempt to predict is price. REINZ sales and median price data up to July shows the median price is stagnant and has been for about 16 months in the $340,000 to $350,000 range.
However, if the feedback I’m hearing from agents is representative I’m expecting higher number of sales at slightly lower prices. Agents are saying the long, cold winter of slow sales has made vendors more realistic about value.
I think we can expect the traditional lift in sales and interest in real estate that spring usually brings but not necessarily at the same levels we’ve seen in recent years, hence why I say an upturn in the market is imminent.
To temper any over-enthusiasm
about my prediction that the market is warming up – I mean
the kind of slow and steady warmth you apply to frostbitten
body-parts to avoid
More graphs and information will be posted after 7pm tonight on The UNCONDITIONAL Blog - www.realestate.co.nz/blog