A single month’s data is meaningless: Terry Ryder

The great majority of consumers I meet are poorly informed about real estate.

They make bad choices on information sources – they read newspapers – and the misinformation they absorb leads them to bad choices on real estate.

Mainstream media is extraordinarily careless with its treatment of real estate information. Most articles are re-cycled press releases, which are essentially propaganda from vested interests, which means the information is suspect and ought to be rejected or at least challenged.

A current example is the credibility media is giving to the annual Demographia report, which is a work of fiction by a developer lobby group which opposes regulation of developer activity and has concocted “research” that appears to support its stance.

Sydney is declared the third most unaffordable city in the world in a report that compares Australia to only a handful of other nations and uses arbitrary, self-serving methodology to declare pretty much everywhere in Australia (and New Zealand) “severely unaffordable”, notwithstanding two years of very active markets in both countries.

I could write a book on the obvious flaws and suspect motives in this report but media regurgitates this nonsense without a single question to its authors.

But a more constant cause of real estate misinformation is the failure of economists, other analysts and journalists to appreciate this simple truth: a single month’s data is meaningless. There are always aberrations in monthly statistics. You need to ignore the hiccups and observe the long-term trends.

But few commentators and writers do that. The pursuit of a headline causes people who should know better to place undue emphasis on one month’s figures and create interpretations that are unwarranted - and often rendered obsolete by the next month’s figures.

We recently saw a sharp rise in the jobless rate, which created a great deal of media hot air, only to be negated by the latest monthly figure which has reversed the earlier rise.

In December, Westpac’s consumer sentiment index on real estate matters indicated a sharp decline in confidence, which was widely interpreted as evidence of the end of the mythical property boom. But the January index published this week reverses the earlier decline, making all that “analysis” a month ago a great waste of everyone’s time.

Every small monthly change in housing finance or building approvals – the market is raging one month, the boom is over the next and it’s all on again the one following – is given great significance.

The so-called property boom – the one that has been repeatedly described as national despite its absence to date in Canberra, Brisbane, Perth, Darwin, Adelaide, Hobart, the Gold Coast and most regional centres – has been declared dead at least four times since late 2013, all based on a single month’s data from a single careless source.

In each case, the declaration has been contradicted by the next month’s figures.

The outcome for consumers is confusion, misinformation and ultimately bad real estate decisions. I see the evidence of that every day. This nation is full of real estate consumers desperate for information they can trust.

Does anyone in media give a damn? There’s no evidence that anyone does. Today’s headline is the only issue under consideration.

TERRY RYDER is the founder of hotspotting.com.au. You can email him or contact him on Twitter.

Terry will be participating in a webinar on 'The Best and Worst for 2015: Top 5 Hotspots and 5 Places to Avoid' on 3 February.

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