Contrasting property statistics sets buyers back: Hotspotting's Terry Ryder
Expert Observer
One of the greatest causes of confusion for real estate consumers is the way research companies compile data on prices - and the way media outlets report the results of that research.
Media tends to report price information from each individual research firm as fact, without making any reference to the reality that it’s simply one firm’s view of the situation, based on their individual methodology.
Media will report, for example, that Canberra house prices have increased 14% in the past year. Fact. Because CoreLogic has published a press release saying this is the case. And therefore the Canberra market is booming
But the latest figures from the ABS claim that Canberra house prices have increased around 6% over 12 months. Therefore, the Canberra market is showing solid growth but you wouldn’t classify that as a boom.
But, wait. The latest data from SQM Research suggests that Canberra house prices are up just 0.4% in the past year. According to those figures, the Canberra market is hardly moving at all.
So Canberra is either stagnating, rising moderately or booming, depending on which research source you use.
But mainstream media doesn’t reveal that to real estate consumers. It reports each data release from sources such as Domain, CoreLogic, the ABS and SQM Research as gospel.
And then publishes commentary pieces making all kinds of assumptions and conclusions based on the premise that the published figures are fact.
For example, “Canberra houses are growing beyond the reach of many buyers, with prices up 14% in the past 12 months”. That’s based on CoreLogic data. But other sources disagree, including one that says Canberra prices haven’t moved at all in the past year.
I’ve put together a compilation of the latest price growth figures from three different sources – SQM, the ABS and CoreLogic - which shows the annual percentage growth in house prices and apartment prices in each of the capital cities.
According to two sources, Sydney apartment prices overall have shown small growth in the past year, but the third source suggests prices are still down 5%.
Melbourne house prices, in annual terms, are recovering and starting to grow again, according to two sources, but are still down based on the data published by the third source.
According to CoreLogic, Darwin is leading the nation on growth in its house prices, up 16% in the past year. But the ABS and SQM Research record annual rises of 2-3%, well below the levels of other cities.
SQM claims Darwin apartment prices are up almost 20% in the past year, but CoreLogic says the growth is around 10% and the ABS says it’s just 1.1%.
Mainstream media never highlights these discrepancies, but simply reports each new set of figures as a fact.
There are many reasons why these anomalies in the price data occur.
You might think that the question of whether prices are rising or not, or by how much, is a matter of fact.
But it isn’t. Each research entity has its own individual methodology and parameters. There are also different time frames involved: the latest data from the ABS is up to the end of 2020, while the CoreLogic figures are up to the end of March 2021 and the SQM figures extend into the current month.
But the biggest problem is that the research firms are attempting the impossible. They’re seeking to distil all the thousands of property transactions in a city as large of Sydney down to a single figure, which says Sydney house prices have risen 7.7% or 5.3% or 2.5%.
What’s happening in Bondi is very different to Penrith, and Vaucluse sits in stark contrast to Blacktown. They’re putting sales in suburbs where typical houses cost $5 million into the same melting pot as locations where the average home is $650,000 and expecting it to deliver a meaningful figure for “Sydney houses”.
According to the latest CoreLogic data, the annual growth in median houses in specific suburbs is as follows:-
Manly up 2.5%
Burwood down 8.8%
Cronulla up 21.3%
Blacktown up 7.1%
Rose Bay down 7.2%
Kensington up 3%
Kellyville up 13.2%
Gordon up 9.2%
Mt Druitt up 5%
Vaucluse up 2.5%
Putting all those differences, and hundreds of others, into the algorithm delivers a result which says Sydney house prices have risen 7.7% in the past year.
Fact.
Terry Ryder is the founder of hotspotting.com.au
ryder@hotspotting.com.au
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