Tuesday, 13 September 2011

Changing sales volumes since 2000

Looking back to the beginning of 2000 we can see how the number of house sales nationwide has changed over time. After peaking at nearly 28,000 sales per quarter in 2003 the number of sales settled at around 22,000 until 2007. The global financial crisis of 2008 saw sales volumes drop dramatically to under 12,000 per quarter before a minor recovery in 2009. Sales then began dropping again in 2010 before recovering through until now. In the last complete quarter to the end of June 2011 the number of nationwide house sales was exactly half of the peak, and 26% below the average for the June quarter since 2000.

In recent months we have seen house values increase nationally, with particular strength coming from the Auckland area, but with considerable variability across the country. When we look at the corresponding number of sales we see a similar pattern of variability.

What is immediately clear is that the number of house sales in most areas remains well below the average, with some notable exceptions. Compared to most of the country the Auckland areas have recovered to be only modestly below average with Franklin 2% below the average for the June quarter since 2000, Rodney 7% below and the old Auckland City 11% below.

Moving south, most districts in the North Island are well down on average with some of the more rural districts such as South Waikato, Waitomo, Wairoa and Ruapehu being 60 to 80% below average.

In the greater Wellington area there is something of a mixture with sales in Upper Hutt only 8% below average, while Porirua is 20% down, Lower Hutt 39% down and Wellington City 25% down.

In the South Island, with the obvious exception of Christchurch, the number of sales is not as far below the average as most North Island areas, and there are also several areas where the sales in Q2 this year are above average.

In Nelson the number of sales is only 5% below the average. This in part is because sales numbers have held up well in recent years, but also because during the boom years of 2002 to 2007 the number of sales in Nelson dropped in 2004 and 2005 which pulls the long term average down.

In the Buller District the number of sales is above average by 8%. Buller tends to have a small number of sales, around 55 per quarter, so small changes in sales can swing percentages more. Sales peaked in Buller during 2003 at over 100 per quarter before quickly settling back to around 70 per quarter through until 2007. Sales dropped in 2008 and 2009 but since then have been steadily increasing and in the June quarter were over 60.

The Hurunui District, where the main residential centres are Amberley and Hanmer, shows a similar pattern to Buller and now sits 7% above average. Sales volumes have picked up in Hurunui over the past year which has also helped lift the average.

In Queenstown Lakes the average number of sales in the June quarter during the boom years of 2002 to 2007 was 136.This didn’t drop significantly during 2008 to 2010 and in the June quarter of 2011 the number of sales was 5% above the June quarter average.

By far the best performing area across the country is Selwyn District to the west of Christchurch. However this is where statistics can be mis-leading. The Selwyn District stretches from Arthur’s Pass in the west across the Canterbury Plains to border the western side of Christchurch City. Close to Christchurch the centres of Prebbleton and Rolleston have seen significant growth in recent years as new housing developments within easy commuting range of Christchurch have sprouted up. Following this growth the number of sales in Selwyn grew from a couple of dozen in 2000 to nearly 250 a quarter in 2007. Over recent years sales have dropped ack to around 125 per quarter. So although sales in Selwyn are well below the peak of 2007 the longer term average is pulled down by the fact that there were so many new developments (and hence sales) in the mid to late 2000’s while prior to that sales were much lower. Despite that, it appears as if the Selwyn District is also seeing recent strength in sales from displaced Christchurch residents.

There are signs that new listings may have picked up in recent months. Furthermore, spring tends to be a busier time in the property market (recent years being a notable exception). It will be interesting to see if Auckland’s growth continues and whether some of the smaller centres around the country start to see an increase in activity also.