Wednesday, 9 November 2011
A Spring lift in sales?
At around this time of the year some property commentators mention a Spring lift in sales numbers. We’ve looked all the way back to 1981 (when our database began) to see what, if any, evidence there is for a Spring increase in sales.
First, some boring stuff. We’ve defined Spring as the months of September to November. Summer December to February, Autumn is March to May, and Winter June to August.
As far as measuring the number of sales, we’ve used the number of market sales of residential properties that had agreement dates within that season. In other words that is when the sale and purchase agreement was first signed rather than when the sale settled. So it reflects the intention to purchase.
Here’s a chart that shoes the average number of sales by season since 1981.
So, is there a Spring lift in the number of sales? Yes, but it’s more of a step than a leap. Since 1981 the average number of sales in Winter is 21,478 and that rises to 23,279 in Spring, which is an average increase of 8.4%.
Some other things to note are that Autumn has the most sales, Summer the least.
Summer suffers from the Christmas slow-down which means that the number of sales in December and January are much lower than other months. Things start to pick up again in February. The peak month of the year is March which helps push Autumn up. In fact the increase from Summer to Autumn is on average 15.0% so there is far more of an Autumn lift in sales than there is a Spring one.
We’ve seen some very different market conditions over the last 31 years, so let’s now look at how the Spring lift has changed over that time.
This chart shows the percentage lift from Winter to Spring each year from 1981 to 2010, with the horizontal line showing the long term average Spring lift of 8.4%.
From 1981 to 1991 there was no consistent Spring lift, with 5 of those 11 years showing a Spring decline. Since 1991 there has been a Spring lift every year, some more than others. The Spring lifts were much more pronounced in the mid to late 1990’s and again during the boom years of 2001 to 2006. Since 2007 the Spring lift has been much more modest, ranging between 3.7% in 2010 and 6.0% in 2009.
So what about this year? Too early to tell but anecdotal evidence from QV valuers suggest that although there are more listings coming to the market, they are either not in the places of highest demand, or that both buyers and sellers are generally being very cautious in their decision making. Chances are that any Spring lift this year will be in line with the last few years and be less than 5%.