More real estate employment pain tipped

More real estate employment pain tipped

Despite property prices dropping in July, buyer motivation is low across the country and volumes continue to stutter along in most places, according to First National Group.

Group general manager John Stewart predicts further staff losses, office closures and amalgamations unless an upswing emerges.

“The presently stalled market is effecting many areas of the economy in general terms and is clearly seen in the real estate industry.

“Our July office survey reflects a trend noted by us before Christmas. The current hiatus reflects a lack of buyer confidence for a variety of reasons.

“Buyers remain concerned about the likely cost of money, job security [especially in regional towns and cities], the banks' deposit demands and possible further property value drops. We are also hearing many are waiting to measure the positive effect of October tax cuts.

“This enduring and steepening downward trend in sales volume and value is now being reflected by business comments, a general concern for the future.

“Dr Bollard might have taken greater cognisance of this when reviewing the OCR, I would have thought. However, he did flag an easing of rate pressure into 2011, a minor positive in itself.

“From an industry perspective I anticipate further losses of staff and closures or amalgamations of real estate offices. This could be quite marked in those markets likely to be slowest to recover should a leveling or lift occur toward or immediately beyond the end of the year, as one would normally expect.

“Such areas as are reliant on discretionary spending [holiday and recreational markets] and those many rural service towns which have been sorely hit, especially those not involved in the dairy market.

“We believe the one positive coming out of the overall global financial crisis when considered alongside the advent of the Real Estate Agents Act 2008 is that, in the main, only those professional and well-performing members of the industry will remain.

“However, no service industry can afford to lose too many of its leading lights nor too much of its accumulated experience and expertise. Perhaps we are closing on that fine line as this long winter endures.”

July Survey Results

The Group’s regular monthly survey, representing around 450 salespeople in First National’s 70 offices nationwide, includes buyer enquiry indicators, listing level measures, and buying and selling trends.

Prices
During July house prices in 80% of offices dropped in at least one sector (ie 2rm, 3rm or 4+ brm) in 80%. This compares with property price drops in 65% of offices in June this year.
In 17% percent of regions prices were the same as July last year.
Wellington’s northern suburbs continued their golden run from June and were the only places seeing a rise in housing prices across the board for 2, 3, and 4 bedroom homes compared to July 2009.

Volumes:
Fifteen percent of offices sold more properties compared to July last year but 55% of offices sold fewer and 30% sold the same number. Auckland featured strongly in the offices that sold more than last year. Northern Wellington was a bright spot where house sales doubled month on month.

Listings:
Listings continuing on a slight downward path overall with 46% of offices reported having fewer listings compared to this time last year. However, 37% of offices saw in increase of listings and 17% of offices saw no change.

Market activity
Visits to the Group’s property website were slightly above same time last year.
General enquiry had increased in Auckland, Whakatane, Johnsonville, Tauranga, Taumaranui and Wellington. Tauranga reported more interest in lifestyle and cheaper properties.

Selection of comment
“Buyers remain reluctant” – Rotorua.
“Buyers are offering much lower than the asking price. Market somewhat depressed and nobody is in a hurry to make a deal” – Timaru.
“Less buyer urgency, tightening of mortgage finance” - Nelson city.
“Banks are tightening lending criteria and apart from the deposit are now requiring last 3 months saving records” – Whangarei.
“Buyers have the power, but vendors are reluctant to meet buyers” – Howick, Auckland.
“A lack of confidence, job security, interest rate increases are all adding to speculation of market trends. Purchasers market and cash is talking with an attitude of take it or we move to something else” – Ford Baker, Christchurch.
“Very little economic confidence as recession lingers…” – Mark Stevenson First National, Blenheim.

ENDS

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