The Bagrie Economics Cycle Indicator – or BECI – is a stylised representation of where regions and cities are in the property cycle.
We characterise the property cycle as involving four stages.
Green shoots depicts the early stages of recovery. Prices start to lift. More properties are sold but you are typically lifting off a low base or level of activity. Days to sell start to drop from an elevated (or weak) level. It’s movement, but off a low base and signifies improvement.
The boom phase involves accelerating prices gains and high levels of activity. More property and being sold and days to sell falls below average, depicting a tight and strong market.
The moderation phase is where price gains start to ease and fewer properties are sold. It’s when the market hits a turning point, but momentum is still positive. A key feature of this phase is that the level of activity is still high, but momentum is fading in strength. Days to sell start to rise (turning point signal) but can still be low (solid market signal). This depicts an easing market, but from a position of buoyancy.
The correction phase is when price momentum is weak and the level of activity is low. Days to sell sit above average and volumes of property sold is below average.
BECI is calibrated using Real Estate Institute of New Zealand figures – the most timely gauges of the property market in New Zealand.
We use an array of price measures including the house price index, median sale price, average sale price, median list price, days to sell, volume of house sold and the sale to list price. For some indicators both levels and changes are used.
Some regions, such as Gisborne, Hawke Bay and Southland continue to show strength
More regions have, however, moved into the moderation stage in the cycle relative to March.
Auckland remains in correction mode.
The scales on the axis are standard deviations from their mean. This is just a fancy way of saying how far away from average the market sits. In some instances series have been de-trended. The more positive the number on the scale, the hotter the market, and the more negative the weaker the market signal.
Please contact us for more information. City and ward calculations are derivable as well.
While Bagrie Economics uses all reasonable endeavours in producing reports and undertaking analysis to ensure the information is as accurate as practicable, Bagrie Economics shall not be liable for any loss or damage sustained by any person relying on such work whatever the cause of such loss or damage. Data and information have been gathered from sources Bagrie Economics believes to be reliable. The content and signals given by BECI does not constitute advice..