The Housing market Conundrum

University of Auckland Thursday 13th August 2009

Disclosure of interest

Industry owned – 93% of all licensed real estate

offices subscribe

Sales volumes - likely to grow steadily back to long term volumes

Rising demand – stifled natural demand & population growth

Constraining demand - continued tight credit criteria

Restrictive supply - Returning flow of new builds

Balanced supply - steady flow of new listings

Price movement in a narrow band from current $320,000 - $350,000

A quiet / un-dramatic property market

Boom or Bust – everyone has an opinion

Access to accurate, timely and comprehensive data is

critical

The web has opened up a richer source of data on the dynamics of

the market for property

TurnoverTurnover ValueValue PacePace DemandDemand SupplySupply

Sales PriceSales PriceProperty sales

Property sales

ValuationsValuations

Days on the market

Days on the market

InventoryWeeks of

sale

InventoryWeeks of

sale

New listingsNew listings

Asking priceAsking price

Website traffic

Website traffic

Lead generation

Lead generation

Better informed decisions based on richer information

New monthly report

Asking price – truncated mean

Current data lags the market by up to 4 months

Property is a local business – small markets can distort data

Principles of real estate

TurnoverTurnover ValueValue PacePace DemandDemand SupplySupply

Sales PriceSales PriceProperty sales

Property sales

ValuationsValuations

Days on the market

Days on the market

InventoryWeeks of

sale

InventoryWeeks of

sale

New listingsNew listings

Asking priceAsking price

Website traffic

Website traffic

Lead generation

Lead generation

Analysis of new indicators of the market

Property sales – all time low

Putting sales into perspective

Supply – inventory building

Supply – true inventory more balanced

Demand – web traffic as a surrogate of consumer confidence

Demand - Lead generation showing strong interest and enquiry

Buyers now feel in control

Property Prices - stability

Property Prices – 20 months post peak

Property Prices - no inflated expectations in asking price

Property Prices – Comparison to UK

Fundamentals in NZ are vastly different

-3.4%

-20.6%

Factors that drove the UK / US property markets were unique

2.1 million 4.0 million 3.5 million

2004 2007 2009

NZ property market is not the US

Vacant homes in US

Property Prices - future path of property prices – UK 80’s / 90’s

Sales volumes - likely to grow steadily back to long term volumes

Rising demand – stifled natural demand & population growth

Constraining demand - continued tight credit criteria

Restrictive supply - Returning flow of new builds

Balanced supply - steady flow of new listings

Price movement in a narrow band from current $320,000 - $350,000

A quiet / un-dramatic property market