Download full Survey:
Real Estate Institute Consumer Survey Report 2003.pdf
Summary of key findings
- Increases in the number of unconditional Sale and Purchase contracts.
- Growth in the number of vendors selling their property under an exclusive/sole listing.
- An increase in the number of buyers who were pre-qualified for finance.
The survey was undertaken by Massey University's Department of Finance, Banking & Property for REINZ and was based on similar research carried out for REINZ in 1990, 1994, 1997 and 2000. Recent buyers of residential property in the cities of Auckland, Christchurch and Dunedin, and in the Waikato/Bay of Plenty/Gisborne and Manawatu regions were surveyed over the Christmas vacation, and this drew 917 responses. 482 respondents also completed a home sellers section of the mailed questionnaire. Graham Crews of Massey University oversaw the project and the findings were presented to National Councillors at their August 2004 meeting.
When comparing the results of the latest survey with the last survey, conducted in 2000, 35% of buyers reported purchasing their property unconditionally compared with 33% in 2000, which confirms a trend towards unconditional agreements.
Conditional purchasers
Of those whose purchase was conditional, 27% reported their agreement was subject to finance and 9% subject to the sale of another property. Both these findings show a downward trend when compared to previous surveys. This time 32% of buyers (14% in 2000 and 12% in 1997) reported their agreement as subject to a LIM report, indicating that a significant number of buyers or their advisers prefer a LIM report before confirming the sale. The number of agreements conditional on a building or engineering report also increased significantly to 22%, up from 13% in 2000.
Listing type
The use of Sole/Exclusive marketing has increased steadily over the series of surveys, as has the success in using that method for selling properties. 92% of vendors reported selling their home under an Exclusive/Sole listing. Previous surveys reported the percentage of properties sold as the result of a Sole/Exclusive Agency Listing as follows: 1990, 45%; 1994, 75%; 1997, 81%; & 2000, 87%.
Finance
There was also a significant increase in the number of buyers who reported they were pre-qualified for mortgage finance before approaching a real estate agent: 2003, 72% compared with 67% in 2000.
Reasons for buying or selling
What has remained constant over the past three surveys has been the primary reasons vendors have given for selling. This time 13% reported that the primary reason for selling was to move to a larger house, another 13% cited upgrading their home, with 13% also saying it was to move to a better locality. A further 11% gave their primary reason as lower maintenance. These same four primary reasons have consistently scored highest in all previous surveys, although their order has varied and there has been a decline in 'moving to a larger house' as the primary reason over time.
25% of the respondents were first home buyers and a further 30% of buyers reported owning more than one home. Among home buyers 92% bought the property as their primary residence, 7% as an investment property and only 1% as a holiday home.
Service and perceptions
While 73% of vendors (down from 77% in 2000) reported that they had confidence in their agent's competence, only 7% reported low confidence. Likewise, the number of respondents who considered that their agents had done all that was possible to sell their home fell from 74% in 2000 to 71% in this latest survey.
When sellers were asked to rate the quality of overall service shown to them by the real estate profession, 34% rated the service as excellent and 27% as very good, with 11% reporting that it was poor. This compares unfavourably with the 2000 survey when the respective findings were: 36%, excellent; 33% good; and 9% poor.
This adverse result can be partly explained by another finding that there was a correlation between the length of time a seller's property was on the market and the seller's rating of overall service provided to them by the real estate profession. The longer the property was on the market the higher the rated levels of overall satisfaction. 50% of the sample's sales were concluded within the first two weeks of listing with a median "days to sell" of only 18.
This finding suggests that vendors' perception of value is greater the longer it takes to sell. In engaging a real estate agency, they want their house to sell quickly and for a good price. However when this occurs, they perceive less value in service delivery. This is reflected in the national median "days to sell" in December 2000 of 51 compared with a national median of only 23 days in December 2003.
Once again, the survey confirmed that buyer perceptions of the personal service they received whilst purchasing their home is substantially more favourable than their general perception of the real estate industry. 61% of buyers felt that the service they received was either above average or excellent, whilst 20% regarded it as somewhat poor. This compares with 68% and 14% in 2000, a finding that is most likely explained by the marked decrease in the number of days to sell and increase in the number of sales; rather than any fundamental decline in the standard of service provided by real estate practitioners.
Support for this contention is also provided by the significant improvement in those reporting favourably on their agent's understanding of the property market. 48% reported their agent as having a high understanding of the market, up from 44% in 2000, which was up from 30% in 1997. This finding reflects favourably on the professionalism of real estate practitioners in a buoyant market and is consistent with REINZ’s focus on ongoing education and professional development.
Marketing tools
Finally, when sellers were asked to rate the most effective marketing tool used in the sale of their property, the ratings were: 29% open home; 22% Property Press; 14% daily newspaper; 13% For Sale sign; 10% identified the Internet; and 8% felt the agent's ability to use buyer databases was paramount in selling their property.
