October Property Report: house prices, LVR restrictions, Ireland, and proclamations galore

The Proclaimers

A couple of commentators take a close up look at our property market.

The fact that everybody has an opinion about the property market is both a blessing and a curse. It’s mostly a pain in the neck for me, who spends my days searching through the experts’ pronouncements for some common ground.

Here’s what these proclaimers are saying about October:


Home buyers: from misery to… more misery

Realestate.co.nz is reporting a record high mean asking price of $482,063 – up 8% on October 2012. This was driven by three of the main centres – Auckland, Wellington and Christchurch – who all reached regional records.

Plenty of new listings to choose from also – 13,978 of them in fact, 27% up on September and, more significantly, 10% above October 2012. People must be snapping them up fast though; inventory levels remained constant at 24.2 weeks.

Meanwhile, QV figures show an 8.9% increase in property value over the past year. The main culprits, again, are Auckland and Canterbury – up 14.5% and 11.8% respectively. Other main centres are slower to rise, while “many of the provincial and rural areas have declined in value.”

Just yesterday, REINZ announced some more record-breaking data: their median house price jumped to $407,525, driven by regional highs in (surprise surprise) Auckland, Canterbury/Westland and Waikato/Bay of Plenty. Their Stratified Housing Price Index, which adjusts for outliers in the market, shows a 9.9% price rise over October 2012.

Looking just at Auckland, Barfoot & Thompson’s data, showing an average price rise of more than $5000, was “totally expected” in their view. Their 1203 properties sold in October was 8.9% above figures from October 2012.

More interesting is the drop in median price, down $10,000 to $590,000. This is, in part, due to the extra sales of properties worth under $500,000 – up 20.6% on September. But why? As Peter Thompson explains, this “may be an indication that a large number of first time home buyers committed to entering the housing market before the new rules took full effect.”


Lending restrictions: uh-huh, uh-huh, uh-huh, yeah-nah

Mr Thompson is referring, of course, to the loan to value ratio (LVR) restrictions that kicked in on 1 October. How have other commentators assessed its impact?

The most interesting findings come from First National Real Estate, whose research shows a 27% drop in first timers at open homes since 1 October.

REINZ also reckons we’re seeing its effects already, though their sales and price data shows little sign of a slowdown there.

Tony Alexander’s findings, from the fortnight ending 1 November, indicate a sharp downturn in home loan approvals from the previous year. He is unsure “how much is shock, and how quickly might things revert to a new normal?”

Westpac reports similar findings, but points out that this doesn’t count pre-approvals or those resorting to second-tier borrowers. We might, they say, see a slowdown in housing turnover and credit growth next month.

Meanwhile, the New Zealand Herald reported a noticeable absence of first home buyers in Auckland’s under $600,000 market. Perhaps they’re looking at different data than Barfoot & Thompson.

Conversely, QV thinks it’s too early to address the impact of LVR caps, as evidenced by their press release titled “Too early to assess the impact of LVR caps.”

Overall, the evidence suggests the signs of a slowdown are already emerging. What the ‘new normal’ will look like still remains to be seen.


Ireland: We’re gonna be (if we’re not careful)

Last decade, for various reasons, Ireland went from roaring tiger to neutered Shorthair in the blink of a smiling eye. (Ooh, poetic.)

The New Zealand Initiative is studying the role housing played in this, and what lessons it holds for our own property market.

Their findings should serve as a warning to governments, central and local, who are planning to build more houses: don’t just build them all at the lower end of the affordability scale.

Ireland’s problems started when the dotcom boom brought a similar growth spurt in population. Then, all this stuff happened (emphasis added):

That influx met a housing supply that had hardly expanded at all in the low-growth decades.

The state’s response was slow in coming, but when it did it came in the form of “build, build, build”, with central government putting pressure on local government to ensure the delivery of thousands of housing units (does this sound familiar?) in short order.

The net effect was to fragment the market. On the low end there was surge in supply, which brought prices within reach of first home buyers, but it also sated demand for these units.

Homeowners in these low-end housing units, when they were ready to trade up, found it hard to sell. And the houses they wanted to buy in the next tier up were even more expensive than ever because development activity had only focused on the type of homes that could be constructed as quickly, and as easily, as possible.

The Irish were left with a simple choice: stay in the small housing they were in but didn’t like, or borrow more to buy the housing they wanted, a situation that has many parallels with New Zealand.

It all sounds eerily familiar indeed. We hope policy makers have studied the Emerald Isle and thought about how to avoid a similar doom.


Your line here

What do you make of all these findings? Will fewer first home buyers in the market have a long term effect on prices? Are we about to repeat the mistakes of our Celtic brethren? Share your thoughts below or over on our Facebook page.

September Property Report: banks vs first home buyers, Reserve Bank vs Parliament, and supply vs demand

Cover pic 230913

One of our favourite houses from the past month, this quirky 311m2 Christchurch property is up for auction in a couple weeks. Check it out here.


The US Government may have shut down, but at Open2view we’re working hard through the always busy spring. With the warmer weather always comes an increase in houses to photograph, video, the works.

The big real estate news this month though has been the new lending restrictions for those with less than 20% saved. Has this put a dampener on the property market? Let’s find out.


The stats

According to realestate.co.nz’s NZ Property Report, the nationwide mean asking price is up 0.7% to a record $466,526. While Auckland prices dropped 0.8% the other regions picked up the slack, with Canterbury prices up by 3.2%, Waikato 3.9%, and Marlborough jumping a massive 18.6%.

It may be that buyers were getting in early to avoid the lending restrictions. If so, October’s figures could be much different.

Meanwhile, 11,000 new listings last month represents 2.7% more than August, a 1.4% drop on last September, and a 12-month total just 0.2% above the previous 12-month period. Still, then, a seller’s market.


Speaking of housing supply

Another problem with loan to value ratio restrictions:

The Master Builders Association Chief Executive, Warwick Quinn, told Bernard Hickey that builders are seeing big drop offs in new home orders in light of the new lending rules.

The MBA estimates about 15% of new homes are built for first home owners; the Reserve Bank reckons the figure is closer to 10%. Either way, if this drop off continues, that’s a lot of new homes that won’t be built.

Exemptions are often awful things to have in public policy; it’s amazing how many people can crawl through even the smallest of loopholes. But, should the Reserve Bank ever look to tweak things, they could do worse than exempting buyers who are adding to the supply of houses.


Speaking of the LVR changes

How are you all coping with the changes so far? Have you been affected, be it by this or ASB’s cancelling of low equity preapprovals?

Borrowers have every right to be mad at ASB’s announcement. Their lending has been very heavily to the under 20% bracket, so they were always going to be affected most by the new lending restrictions. Still,







Still, not all is lost for first home buyers. If lending restrictions keep interest rates and prices down for longer, that’s good news for buyers of all kinds.


Speaking of first home buyers

And it seems the Government has something up its sleeve: a plan to sell around 400 former state houses to lower-income earners in the provinces. And buyers will be subsidised up to $20,000 for the privilege.

Says the Minister:

“FirstHome will help modest income earners in provincial New Zealand buy their first home by gifting them a 10 per cent deposit and giving them priority to purchase surplus vacant state houses no longer needed by Housing New Zealand,” Dr Smith says.

“They’ll face strict conditions, including earning no more than the average income and have to own and live in the house for at least three years.

If you earn under $53,000 (or $80,600 for two or more people), this could be the deal for you. You’ll also be eligible for other assistance through KiwiSaver and the Welcome Home Loan.

The timing of the announcement is not coincidental. The Government has been public about their desire to have first home buyers excluded from the LVR changes but didn’t get their way; this policy will soften the blow for some.


Think you can tell the Reserve Bank what to do?

Some politicians have been promising to boss the Reserve Bank around on housing should they get into power.

Of course, it isn’t that simple. The Reserve Bank Act 1989 gave the Bank one goal – price stability. Governments and Governors can set targets, such as a range of acceptable inflation, but other than that how these targets are achieved is entirely up to the Reserve Bank.

There is one clause that could perhaps be used to override this by future governments. If we may sound academic for a moment… Graham and Smith (2012) pointed out that section 12 enables the government to substitute one policy objective (i.e. price stability) for another for up to 12 months. This is, they explain, “designed to allow the temporary imposition of a new objective, but to otherwise keep the same relationship between the Governor and the Minister with respect to the implementation of policy as in more normal times.”

David Cunliffe made a possible allusion to this – the “oi, look at this” clause as he described it – on Firstline this morning. So can it be used to exempt first home buyers from lending restrictions? Possibly. Will it? We may find out sometime.


Your thoughts

Is FirstHome the ideal way around lending restrictions? Does the Reserve Bank have too much power for your liking? What will become of house prices in the next year or two? Have your say below or on our Facebook page.

August Property Report: too many flyers, not enough houses

Coming home from the office last Thursday, I opened my letterbox to find this:

five flyers

That’s – count them – five real estate flyers arriving in my letterbox in just one day, from agents asking if I’d like them to sell my house. To which the answer is sure, as long as my landlord doesn’t find out.

All this fighting for my love is a telling indication of how heated property is here in Auckland. Exhibit B: my neighbour’s house was listed two weeks ago with an auction to be held in three weeks. It sold in just one.

So there’s some anecdotal evidence. I suppose you want some actual data too, right? Very well:


Some actual data

August set a few more records, according to our friends at realestate.co.nz.

Auckland and Coromandel reached new asking price. Auckland, despite more listings, hit an all time low of just 11 weeks worth of inventory. Waikato and Bay of Plenty also have fewer houses available than ever.

If we compare the headline figures to last year, the national mean asking price is up 9% on August 2012, listings are up 3.4% and inventory is down 14%. In short, there ain’t enough houses coming on the market to keep choice, or price, at an acceptable level for buyers. Check out the full report here.

Meanwhile, QV just released their latest stats showing property prices have increased 8.5% in the last year. This is, again, largely driven by Auckland and Canterbury; most regions, while up on last year, are far behind. They expect house prices to increase “for some time yet.”


Some alternative views on Auckland

Some schools of thought argue that Auckland’s price growth is not as terrible as it seems.

Figures released last month by Barfoot & Thompson suggest the Auckland market has seen “solid, rather than spectacular gains.” A look at three bedroom properties by area, over the past decade, show price rises ranging from 58% (Franklin/rural Manukau) to 100% (West Auckland). Most of the increases came during the 2003-07 boom period.

QV, curiously, reckons the jump happened the other way round:

…over the past decade Auckland has increased 87 per cent compared to 88 per cent for all New Zealand. In fact, many other parts of the country increased in value much quicker than Auckland during the boom years of 2003-2007. After this time the rate of increase skyrocketed in Auckland compared to the most of the country, bar Christchurch.

They provide some other interesting stats also:

  • Auckland has nearly 418,000 houses, flats and apartments – 31.1% of the nationwide total.
  • With a 2012 population of 1.5 million, this equates to nearly 3.6 people per property.
  • From 2007-12 Auckland’s population grew by 111,500. There were only 25,850 building consents over that period. If we were to divide one by the other, that gives us 4.3 new Aucklanders per new property. Clearly, supply is an issue. Auckland needs to up its building consents game.


Some houses, but is it enough?

That was the topic of a recent article by Alistair Helm over at Properazzi. As he says, for the first time since November 2008 the number of consents in a 12 month period has exceeded 19,000.

Is this good? Well, the 1970s saw annual consent figures of over 35,000. Numbers at the turn of this century exceeded 30,000. So clearly we still have more catching up to do.

Interestingly, the nationwide average number of people per household is 2.67, slightly higher than before the Global Financial Crisis (where young people opted to bug their parents a wee while longer) but still lower than in Auckland alone.

It wasn’t just young folk who were slow to get moving during the GFC; construction plummeted during this period as Alistair’s chart shows:


The estimated shortfall over this period, according to Alistair, is 38,000 properties. Ouch.

The Auckland Council reckon they’re onto it though. The Housing Accord was approved yesterday, the legislation around it has already passed, and now they have a timetable drawn up for their first “special housing areas” – those parts where consents will be fast-tracked.

All going well, we’ll see SHAs containing at least 5000 new homes approved by Christmas. The end goal is 39,000 homes in three years. Can it be done? As interest.co.nz says, it’ll be tough:

The moot point that will remain is who will undertake all the developments and can the 39,000 in three years target be achieved.

Auckland did achieve 12,000 new houses in a year briefly in the early 2000s, but the figure’s averaged closer to 4000 a year in recent years and the long running (20-year) average is only 7400 a year.

The other potential snag in ramping up development in Auckland is that the rebuilding of Christchurch means there will be huge competition for labour and resources.


Some of your thoughts

Are prices too high where you are? Are we too worried about Auckland? Got any stories you’d like to share? Ready to put up the “No Junk Mail” sign? Tell us all about it in the comments or over on Facebook.

July Property Report: big stats, curious theories and Auckland refugees


A new month means new data and a bunch of new questions to ponder. Onwards:


So, how’s it going?

The July edition of the NZ Property Report from realestate.co.nz broke a couple of records.

The national asking price of $465,191, up 8.4% from July 2012, has never been higher. Nor have the asking prices in Auckland ($639,685), Canterbury ($422,043) and the West Coast ($318,816).

New listings are coming thick and fast for this time of year. Numbering 9857 last month, this is up 9% on June’s rather low figure and 5% higher than this time last year. This influx is good news, but with buyers not taking the winter off it wasn’t quite enough to keep the asking price from rising.


What are the banks saying?

The BNZ’s Tony Alexander sees prices continuing to rise for a while yet. He puts this down to a number of factors that include first home buyers and investors making up for four years of inactivity, a looming builder shortage, and sellers still being nervous nellies. As for agents, “each listing gained is a guaranteed pay check. [sic; it’s spelled “cheque” round these parts.]”

ASB keeps tabs on the Canterbury economy via something they like to call the ‘Cantometer Index’. We’ll take a closer look at it one of these days; in the meantime it ticked upwards in July to 0.9 thanks to plenty of housing and construction activity.

The Christchurch real estate market is behaving much as you’d expect: supply is tight, demand is firm, thus prices climb. As long as building consents continue to flow in, and out again, this pressure should eventually ease.

And Westpac has come out and agreed with pretty much everything we’ve said about the Reserve Bank’s forever-looming Loan to Value Ratio restrictions. Namely, it’s awful for first home buyers and a boon for their rivals in the market – property investors.

Restrictions on low equity mortgages mean less competition for investors from first timers who, perversely, will wind up renting houses they wanted to buy from the investors they can no longer compete with. Good times.


Wait, aren’t you forgetting something?

In last Saturday’s Weekend Herald, Simon Collins spelled out his ‘five steps to restoring an affordable housing market.’ They are, in short:

  1. Government to provide low-interest lending for first home buyers, plus buying more land for development.
  2. More equality through compulsory union membership and progressive taxation.
  3. Tax rebates for first home owners, fewer tax advantages for investors.
  4. More lending limits and controls.
  5. Restricting, or banning, foreign investment in housing.

There are some problems with each of these:

  1. First home buyers are very active in the market, and as we’ve said when others suggested similar policies, it’ll only further fuel demand and push house prices up. Demand isn’t the issue.
  2. A “culture of high pay” isn’t the issue either; it’s more about the ratio of incomes to house prices, which is being pushed ever further apart. Higher incomes for everyone is ideal – but it won’t really impact house prices if another important factor isn’t addressed.
  3. Bernard Hickey once said that the economy is essentially a “housing market with a few other things tacked on”. A Capital Gains Tax may diversify investments. It still isn’t the issue that needs to be tackled.
  4. The LVR controls planned by the Reserve Bank is part of this. Don’t expect any exchange controls though; we haven’t had anything like that since 1984 and in this free market economy we never will.
  5. Won’t change anything.

The biggest problem with Collins’ prescription is something we hinted at above; the complete absence of anything around supply. It’s a lack of supply – specifically land scarcity, too few listings and a lack of construction – that is pushing prices up and up.

Until the causes are addressed, fighting the symptoms won’t cure anything.


Will the last person to leave Auckland please turn off the lights?

Appearing in our inbox earlier last month were a series of articles on a similar theme:

“Auckland’s rampant house market is creating a nationwide group of middle-class refugees – sick of the overheated prices and willing to trade the big city for a better quality of life in the regions.”

One transplanted Aucklander is looking to sell her Nelson home for $372,000 – a place that would likely have costed $1 million in Herne Bay. And if she can’t sell?  Another summer in Nelson isn’t the worst thing to go through.

Meanwhile, another sold her Mt Albert home for $1 million, bought a house in Kerikeri for $400,000 and banked the difference.

Is this the start of a massive reverse migration out of Auckland? No. It’s still the place to be for young professionals and new migrants. A number of people, however, are fed up and looking elsewhere, which might cause some higher prices in the regions. Be nice to your new neighbours.


What do you reckon?

Are you an Auckland refugee wannabe? Did Simon Collins deliberately forget about supply? Are the banks making sense? Is the market? Is anyone? Sound off below or on our Facebook page.

June property report: prices flatten, sellers doze, and Hone parties

Open2view ID293918 - River Rd 922 The BlockThis house belongs to Richard and Sarah, contestants on the 2012 series of The Block NZ. They put what they learned to excellent use, and if you get along to the auction on 10 July at 12.30pm it could all be yours.

We mentioned last month that winter is often a time of hibernation for real estate. Judging by the latest data, sellers have taken their temazepam, drunk their chamomile tea and headed off to Slumberland.


Sellers don’t seem to know it’s a sellers’ market

Their NZ Property Report from Realestate.co.nz tells us the “inventory of unsold properties in New Zealand has fallen to the lowest point in six years, reporting just 24.9 weeks nationwide.” This was driven by the lowest number of new listings in a June for seven years (9082).

Despite this, the mean asking price fell slightly to $450,178 – one percent down on May, but still 5.7% higher than this time last year. Auckland dropped 1.3% to $623,471.

Some commentators say the price increases is filtering down to regions outside Auckland and Christchurch. Does this report support this? Let’s have a look-see:


When you have five regions recording drops of 5+ percent then it’s hard to argue this convincingly.

Even more telling, figures released yesterday by the Real Estate Institute of New Zealand show that, of the $22,000 increase in the national median price they’ve recorded over the past year, 99.6% of that comes from Auckland and Canterbury. Price rises in other regions, they say, “have been minimal, with the median price for the rest of New Zealand $2300 lower than November 2007.”

Meanwhile, Barfoot & Thompson have recently reported some crazy stats. For the first time in 11 years their end of month listings have gone below 3000 properties. It is also the first time in that timeframe their listings for the month (1189) has come this close to their sales (1059).

Are they just becoming less popular? No, it’s just that potential sellers are becoming even more nervous than we’ve seen since we started these reports last June.


One theory why supply is in short, er, supply

Tony Alexander, Chief Economist for the Bank of New Zealand, writes a lot worth reading. The fact he looks a lot like Larry from Perfect Strangers is just a bonus. Check out his website – we don’t always agree with what he says but he always provides an interesting and insightful read.

Lately he has had some good theories on why supply isn’t picking up. For instance: with interest rates so low, fewer people need to sell their old home to help finance their new one. More buyers, therefore, are keeping their old homes as an investment.

Makes good economic sense: rentals are sound investments, and if you can buy without selling, and you don’t expect prices to drop, it’s a good time to get in.


It’s Survey Time

Tony also runs the monthly BNZ Confidence Survey, which reported back with its June figures last week. The relevant-to-us figures show 36% are happy with house prices rising, compared to 29% unhappy and 35% indifferent. The happy figure is 7% higher than in May.

The significance? As Tony explains, “this question now in order to get an understanding as to whether societal attitudes toward house price rises are changing in some way which might give the government greater, or lesser, scope for more interventionist policies aimed at influencing house prices and mitigating the deleterious effects on certain groups. In a nutshell, do we really care?”

The short answer is we do, but perhaps not as much as first thought. Another, quite simple, explanation is that those who own houses won’t mind a jot that their assets are increasing in value. Those who don’t own and want to are, of course, a different story altogether.


Hone’s housing policy: Man(n)a from heaven

Meanwhile, during the recent Ikaroa-Rawhiti by election, Mana Party leader Hone Harawira announced their housing policy. This consists of 10,000 new state houses a year – with 500 immediately in Ikaroa-Rawhiti, conveniently – and special low interest rates for Maori to buy a house, no deposit down.

Off the top of our collective head we can see a few problems. House prices have been rising, once again, because the supply is not there. If you suddenly increase the number of buyers in the real estate market, sellers will simply put the price up out of their reach. So that won’t help one little bit.

Or perhaps it’s doing them a favour. Helping low-income people – assuming Mana would assess eligibility by income as well as race – to buy a house carries good intentions – but not everyone can pay off a mortgage at the best of times. That’s why we have state houses and private rentals, and a good thing too.

At a time when the Reserve Bank are treating mortgages with a loan to value ratio of 80+ percent as ‘high risk’, we’d hate to think how badly they’d freak if houses were being bought with zero deposit by people with similar savings.

We emailed Hone Harawira’s office to ask if they had costed the policy, if they were concerned about pushing house prices up, and whether their proposed lower interest rates would rise in line with others’, but alas received no reply.


What do you reckon?

Will sellers finally start selling? Will rising house prices keep rising? And is Hone right, or just too far left? Share your thoughts below or over on our Facebook page. 

May Property Report: Auckland’s housing accord, and more bad news for first home buyers

SnowmanOpen homes and cold snaps don’t mix, as this unfortunate house hunter soon discovered.

Winter: the season to put on your coat and sit in front of the real estate market until you’re nice and toasty again. Let’s see what’s causing all the heat, shall we?


Insulated or not, housing is still hot

Said realestate.co.nz in their monthly report-back on the property market, “buyers are still out and about and keen to find a home. However, their eagerness to buy is not being met with a consistent and sufficient supply of new listings.”

Having said that, the record high mean asking price of $454,795 is just an increase of 1.7%. Figures just released from Barfoot & Thompson back up this slow upward glide; their house prices are up less than $2000 on April and $1500 less than in March. And figures from REINZ yesterday rate last month as the busiest May in six years (although still quieter than 2004-07, as Alistair Helm pointed out).

As Peter Thompson says, “Auckland remains a market where there are too many people chasing too few properties.” There are fewer listings available than last year, and nationwide the property inventory has fallen 29% to a new low of 25.4 weeks.

Winter is usually a time of partial hibernation for real estate, so it will be interesting to see if the gulf between demand and supply continues to widen.


So, how about that local Housing Accord?

The relationship between the Government and Auckland Council is a little frostier than when we last checked in.

After the two signed the Auckland Housing Accord, the government went away and drew up some legislation to rush their stated dreams into reality.

And that’s where the fun begins. The Herald reported yesterday that Auckland will be asking Wellington to remove from the legislation clauses that allow the latter to take control of housing developments in the city. Councillor Mike Lee is even complaining about the use of the word ‘accord’, labeling it “demeaning”.

What they call the agreement is, frankly, the least of most Aucklanders’ worries. The big question is, will the accord work?

Housing Minister Nick Smith reckons it will, and has no plan to remove the override clause from the legislation.

It’s a clause the Government plans to use elsewhere. Areas with urgent housing needs where this could happen were identified by Dr Smith as Tauranga, Christchurch, Wellington, Queenstown, Nelson and Marlborough.

Some will be unhappy about this usurping of power from locals. On the other hand, without this stick to shake, house building may continue to stall – with nationwide implications.


Home deposits: more proof that we’re right, darnit

You may recall our earlier post on why loan to value ratio (LVR) limits are ineffective and unfair. If not, have a read then come back.

Welcome back. Now, last week Governor Graeme Wheeler gave a speech where he indicated he was more than willing to use his new tools gifted to him by the government to deal with housing without raising the Official Cash Rate, which would hurt the fragile economy.

The biggie, as ASB might call it, is the LVR limits they’ve already announced. David Hargreaves of interest.co.nz spelled out recently, based on his own experience, why he considers it hurtful for first homebuyers:

The one good thing we had going for us was that we might have been savings and asset-poor but we were strong on cash flow, both earning much higher than the average wage. And that meant we could keep the wolf from the door every month and meet the commitments. We were on the “housing ladder”.

I’ve got no reason to believe the 20-and-30-somethings of today are any different. They will do what it takes to get a house. And that’s what worries me.

…Even if our first-home buyers are able to get in somewhere below the median price, say at NZ$400,000, they might need a deposit of NZ$80,000 under the new LVR limits policy. That sounds like a lot to save.

The worry is that the final composition of that NZ$80,000 for many couples might actually be NZ$40,000 of savings, NZ$20,000 advanced on the never-never from the in-laws, and NZ$20,000 borrowed from some second-tier lender at possibly exorbitant interest rates that the primary lender – the bank – will not be told about.

It is a recipe for disaster, potentially.

Amen to that.


What do you reckon?

Is the market stalling? Who knows best – local or central government? Will LVR limits mess with your house buying aspirations? Should we just invest that money into beanies and socks instead? Let us know below or on our Facebook page.

Big is beautiful: why Open2view is the ‘gold standard’ for real estate photography

Ask anyone involved in real estate who Alistair Helm is, and they’ll know. If they don’t, odds are they’re doing it wrong.

Alistair is the former CEO of Realestate.co.nz, the property website (aka portal) that displays virtually every single house for sale in New Zealand. Alistair, like Open2view, recognised early two crucial details about the real estate market.

The first point, that online would become the only source for the vast majority of homebuyers, has consequently been proven absolutely correct.

Having help build realestate.co.nz into the behemoth it is today, he is now showcasing his talents on a global scale. Recently Alistair became CEO of Property Portal Watch, which is the website to follow to keep up with developments in online real estate.

As such, the site is “specifically designed to serve the owners and operators of property portal sites” – but one recent article from Alistair deserves a wider audience.

Property Image Sizes, Getting Bigger – Catch the Trend emphatically makes our second important point: that without good, preferably professional photos, your listing is dead in the water.

Alistair reports:

Recent research has reinforced what most real estate agents and for that matter property portals already knew, property shoppers look first and most often at photos.

The research study undertaken by the Institute for Behavioral and Experimental Real Estate at Old Dominion University at Norfolk, Virginia found that 95% of people, when viewing real estate websites view the first photo for around 20 seconds.

Photos sell property; and this study only reinforced this fact by demonstrating the lesser importance of agent descriptions as part of the listing. The researchers found that a staggering 4 out of 10 people completely ignored the agent spiel.

The whole academic paper Alistair quotes can be read here. I’ll save you a headache; one of the authors, Professor Michael Seiler, summed the findings up perfectly: “without an eye-catching photo, the battle is lost before it begins.”

The first photo is the key weapon in winning the battle. Not only does it have to be beautiful, it also helps significantly if it’s big.

Alistair explains:

The future is becoming clearer in regard to the viewing experience for real estate. Mobile, or to use a better expression, hand-held devices, being tablets and phones or just phablets will be at least half of all viewing for property; the other half may well end up being viewed on ever bigger screens. It is likely that the traditional PC monitor will be replaced by the flat screen TV as property buyers sit back on the couch and browse property on their 60” High definition LCD TV.

So how big are most real estate photos? Alistair has done some homework and found the largest listing page images on realestate.com.au at 772×579, followed by Sweden’s Hemnet (690×460) and US site Trulia (640×427). The smallest? Immoweb.be (“Belgium’s leading property website!”) at a microscopic 145×145.

Immoweb tiny images

Anyone home?

All far smaller than the typical computer monitor, let alone those smart TVs that will soon be all the rage.

So whom do you turn to for the world’s largest, high definition, professional photos?

Open2view, that’s who!

Alistair gave this wonderful endorsement of what we do:

In reviewing the global portals I was torn as to the inclusion of the site of Open2View… They are not a portal in the true sense of the term of aggregating listings from multiple customers and earning income from subscription and property advertising. However there is no doubt that their website is one of the most immersive viewing experiences of any property website I have ever come across.

They make the property image the hero – front and centre with everything else pushed back out of the way – listing photos are 960 x 640 with the overlay switching to full screen at 1135 x 750 – a staggering experience coupled with professional quality images. Whilst not a true property portal, Open2View for me certainly sets the gold standard for online property images. [Emphasis added]

Even better – if your screen’s big enough our fullscreen photos go all the way up to 1600×1066. No matter how you look at them our photos are bigger, brighter and better than anywhere else on the web – and now you don’t have to just take our word for it!

Fullscreen Open2view listing example

Just click the Fullscreen icon on any of our listings for a fully immersive househunting experience.

Neither the study’s findings, nor Alistair’s words of wisdom, should go ignored. Our advice to house sellers: if you want your house looking its very best, tell your agent to contact the Open2view team. House buyers, check out Open2view first – you won’t get a better viewing experience anywhere else.

And while you’re online – check out Alistair’s other website, Properazzi, for more news and views on the real estate market.

March Property Report: All the leaves are brown/And the skies are… still blue

Autumn leaves Open2view

Autumn is here at last, as this photo by Open2view South Taranaki’s Michelle Hoffmans shows. 

Though our days are getting cooler, and my ability to type thus severely hampered, it’s still sunny days in the real estate market.

I will write this quickly, operating on the theory that fast typing will create friction, in turn warming up my cold dead hands.

Realestate.co.nz’s NZ Property Report for March shows the median asking price has moved just 0.3 percent in a month, while listings are down 3%.

The changes are more pronounced when comparing March with the same time in 2012. The average asking price is up 4% over this period while listings are down by the same percentage. Inventory, at 27 weeks, is 20% lower than the year before. In short – good news for sellers, not so great for buyers.

Quotable Value’s statistics further back this up. Auckland house prices are up by 11% over last April. Southside of Bombay, Christchurch is up 7.8% while Hamilton and New Plymouth recorded rises of more than 4%. Only Whangarei saw a decline, with house prices there down 1.8%.

Perhaps the most important trend to note from QV’s findings is this: some buyers are getting a little sick and tired of the high prices. Research Director Jonno Ingerson reports that the rate of price increases has slowed in Auckland, Hamilton, Christchurch and Dunedin.

With prices being high, buyers are increasingly considering telling sellers where to go. Many prospective sellers are also holding on to their homes for now as the Auckland Council’s draft unitary plan threatens to play merry havoc with house values.

Autumn photo Open2view house

The local cattle populace don’t look too impressed with the changing of the leaves. Check out more of Nalene Morton’s photos of this Levin property here.

QV also came out last week with another set of very interesting data. Those asking prices mentioned earlier? In most cases, forget about it.

Going through last year’s sales data, QV found that just 17.2% of sales were for above the seller’s asking price. A mere 6.2% sold for exactly what was asked, leaving a whopping 76.2% of houses selling for less than what the seller wanted.

Take the average asking price in Auckland of $610,628 last month. On the North Shore you can expect to get pretty close to the asking price, unless you’re one of the lucky 30% who sell for above that. In Papakura, on the other hand, prepare to settle for around 4.5% less. The entire article and accompanying tables are well worth a read.

Meanwhile, as this was being written, the Real Estate Institute of New Zealand released its own March figures.

What stuck out most were the announcements that the median house price hit $400,000 for the first time ever, and that March saw the highest number of houses sold in a month – 8128 – since May 2007, at the peak of the last housing boom. Auckland and Canterbury/Westland reached new records of $562,000 and $359,000 respectively.

What stuck out a close second were the comments by Chief Executive Helen O’Sullivan that sounded like a not-so-subtle message to the Reserve Bank. With Governor Wheeler and Bill English looking for tools to curb house prices, O’Sullivan was at pains to point out the stark differences between Auckland/Canterbury and the rest of New Zealand:

“There’s a real danger that the Auckland housing market is mistaken for the New Zealand housing market, and that regulatory decisions will be made on the assumption that conditions in Auckland and Canterbury are replicated across the rest of the country.”

“Supply shortages in Auckland and Christchurch continue to be the main factor in those two markets, resulting in double digit price increases and new record prices, while the number of days to sell reaches near record lows. Across the rest of the country while activity is picking up, price gains are far more modest. To illustrate this, five regions, representing 24% of sales in March recorded annual price increases of less than 1.0%.”

Guess what? She’s right. It would be silly to assume that what’s happening in Auckland and Canterbury is also going on elsewhere. It is, as we’ve always said, a two-speed real estate market. Blunt tools like loan to value ratios that might work in one area could do real damage to the property market elsewhere.

So with so much data and so many differing opinions, how can you decide what to do? Here’s one more link that might ease your real estate headache a little.

Properazzi Property Dashboard

Longtime property commentator Alistair Helm of Properazzi has developed the Property Dashboard, which takes all that data from Realestate.co.nz and REINZ, decides whether it’s a buyer’s or seller’s market, and presents it in a pretty, simple and pretty simple manner.

Best of all, Alistair calculates it by region as well as nationally. There’s no doubt Auckland skews the national data so it’s important to see how different things are in, for example, Gisborne, where the needle points all the way to the other side.

What the Dashboard, and all those other reports prove, is the property market isn’t black and white by any stretch. Look closely and you’ll find shades of grey (and perhaps red, and yellow, and brown).

The big question is: if the Auckland market is in need of correction, as some worry about, will it do so sharply, or will it just float down gently in a tequisous fashion?

February Property Report: the heat is on, real estate is busy too

Open2view Mark Harris

There’s still some green land in Mark Harris’ part of the world, but it’s rapidly drying out. 

Checked the date lately?

Two more weeks and we’ll be one quarter of the way through 2013. A year that, so far, has been dryer than a cinnamon-eating contest during a James Bond movie marathon.

Activity in the real estate market, however, hasn’t even come close to drying up. If anything, it’s getting hotter. Perhaps it’s thus appropriate that I’m writing this in what is, at 27.1 degrees, currently the hottest city in the country. If anyone sees autumn around, tell him New Zealand misses him very much and we would like him to come home.

Right then, onto real estate:


(Temperature update: 27.2)

As we previously noted, January was a busier January than usual. Would this trend continue into February and beyond? Seems the answer thus far is mostly yes.

REINZ this week released their monthly update on Tuesday. Among their findings:

  • 6632 houses were sold last month, up 7.5 percent on February 2012.
  • Fewer listings, however, means the rate of growth is slowing; this 7.5% growth in sales volumes pails in comparison to the 34.4% jump between February 2011-12.
  • The median house price is $382.000 – up 7.6% on the same time last year, and getting closer to the record set last December.
  • Auckland’s median shot up to $535,000, while Canterbury/Westland reached a record $355,000.
  • We also asked last month whether the popularity of auctions was waning. We have our answer: 37.1% of Auckland sales were done under the hammer compared to 21.2% 12 months prior. Nationwide, the percentage jumped 80% between February 2012 and 2013.

There’s plenty more to read in the latest REINZ Residential Report – print it out from here, stick it in a plastic pocket and read it in the pool.

From Realestate.co.nz

(Temperature update: 27.6)

The NZ Property Report from realestate.co.nz also suggests a hot market:

  • The truncated mean asking price rose by 1% to $443,734. This differs from the REINZ figure in that it removes the outliers (that is the top and bottom 10%) and calculates from there how much people are asking for their homes. And with it being a sellers market, people are getting what they ask for and then some.
  • This large high over Auckland is caused by the continued lack of new listings. While we saw a decent number last month, with 13,145 houses coming on the market, this is still 2% lower than February 2012.
  • And with this news, we hit an all time inventory low. If Rob Muldoon rose from the dead and installed a house-listing freeze tomorrow, we’d sell out of properties in 26.2 weeks.

To see conditions in your region check out the full report.

 Open2view South Taranaki truck

Exhausted, a truck passes out in the Taranaki heat. Photo by Michelle Hoffmans.

From Auckland Council

(Temperature update: still 27.6 (plus warm air from fan = 28))

Auckland house buyers have been doing it tougher than most (though still managing to do it). Not to worry, said Mayor Len Brown last month – there’s enough land available inside the city to build 15,000 houses “right now”.

Seems “right now “ means something quite different in bureaucratic-speak. The reality is, as the Mayor admitted this week, we have just 2000 sections ready to build on, plus capacity for 15,000 more on undeveloped greenfield sites.

This requires much more work than building on brownfield sites – previously used land that can be redeveloped for residential dwellings. It’s enough to make you want to slip slop slap somebody.

What this means, in short, is we still don’t have nearly enough developed land to build all the houses we need.  New Housing Minister Nick Smith says Auckland needs to double the amount of land available to build on.

Meanwhile most of the Council is invested in their plan to intensify building in already existing suburbs. But even they’re subdivided on this; Dick Quax is firmly against high density housing, while deputy mayor Penny Hulse thinks it can be done well.

If you enjoy a good scrap, you may want to keep an eye on these greenfield versus brownfield battles. Although, with this drought, it may soon be impossible to tell which are which.

From you?

We just hit 27.7 so that’s enough from us. Is the property market too hot for you? Should Auckland be building outwards or upwards? Drop us a comment below or over on our Facebook page. No sweat.

January Property Report: real estate remains real busy, the wisdom of homeowners, and why LVRs are no good

Open2view #285324

So how did you spend your summer holidays? While most of us took advantage of the golden weather, more folk than usual decided to indulge in some real estate instead.

What does that mean for the market? Let’s take a closer look, shall we? (It’d be kind of anticlimactic to say no.)

Wishing you a Busy New Year

The January edition of the NZ Property Report provides us with the following factoids:

The seasonally adjusted asking price rose 4.2% to $440,507; this is up 5% on January 2012. For just the second time in history the asking price in Auckland exceeded $600,000 – 12.4% higher than same time last year.

8,849 new properties came onto the market in January, up 3.6% on the same time last year.

Inventory has stabilised at 29 weeks nationwide. This is still below the long-term average of 39 weeks, and Auckland and Canterbury continue to be affected by heaps of demand in relation to supply.

For more information and data for your region check out realestate.co.nz’s Unconditional blog.

That awkward Auckland moment…

Early in the New Year, a crafty Auckland housebuyer consulted his calendar, rubbed his hands together and thought “maybe I should get in on the property market while everyone else is out swimming and having barbeques.”

Alas, at his first open home he discovered a whole lot of other Aucklanders had exactly the same cunning plan – resulting in an extremely busy month for real estate and a lot of sossies going to waste.

Barfoot & Thompson, Auckland’s largest real estate firm, reported its biggest number of January listings (1440) in five years and the most January sales in six.

Those 820 properties sold generated an average price of $600,754 – down on December but the first time over $600,000 in any January.

So will this unusually busy start to the year continue on throughout the, uh, year? Our photographers have definitely been busier this summer, so February’s stats will be read with great interest.

LVR: Leave Vendors (un)Regulated

More evidence that talk of imposing Loan Value Ratio limits (LVR) would punish the wrong people:

Liam Dann, Business Editor of the New Zealand Herald, wrote a very compelling piece on the issue of LVRs and how they would hurt young people seeking to buy their first home. Said Dann,

“[Russel Norman] argues that the introduction of LVRs would bring house prices under control, and that would give the Reserve Bank room to cut rates further and that would bring the dollar down. This seems a huge leap of faith.

“Putting rules around the size of deposits required to buy a house won’t bother those who’ve already got cash or have plenty of equity tied up in other properties, although it will certainly make getting on the property ladder harder for those on lower incomes.

“The powers of supply and demand are strong and where there is serious population pressure they typically prove stronger than regulatory forces.”

Dann also points out that China, a country where the state can do pretty much whatever they want, has only achieved limited success with LVRs.

Sure, LVRs would require banks to be a bit tighter with their money, but the big issue with the housing market is a lack of supply, something all the major political parties are making plans to address.

Home buyers – first timers and otherwise – have a form of self-regulation that will stop most from borrowing more than they can afford. It’s a little something called common sense.

It makes perfect economic sense to borrow money while interest rates are low – as they are now – but when rates increase, as they inevitably will, the strategy then is to do one of two things:

  • Save a bigger deposit and thus reduce the amount of interest paid, or
  • Fix the mortgage rate before it floats above their heads.

With some economists predicting mortgage rates to eventually rise up to 8-9%, prices will flatten and demand will dampen. Such is the way of the world.

The Reserve Bank is investigating several ‘macroprudential tools’, LVRs among them, and they’ll report back in March. Here’s hoping fairness prevails.

Over to you

So what do you reckon: are LVRs the way to go after all? What would you do to bring Auckland back into line? Is Auckland out of line in the first place? Or should we all just throw in the towel and go swimming?

Let us know your thoughts below or on our Facebook page.