The REIV's "strongest March quarter in over a decade" for Melbourne never actually existed: Terry Ryder

The REIV's
The REIV's "strongest March quarter in over a decade" for Melbourne never actually existed: Terry Ryder

I’m never sure what to make of figures from the Real Estate Institute of Victoria. The latest offering, covering price movements in the June quarter, has added to the confusion.

As Property Observer reported on Friday, the REIV claims a 2.4% increase in Melbourne’s median house price in the June quarter. But the rise was made possible only be a downward revision of the previously-trumpeted March quarter result.

Originally, the REIV said the median house price had risen to $561,500 in the March quarter and claimed this was “the strongest March quarter in over a decade”. But now we’re told the real figure for the March quarter was $549,000.

That “strongest result in 10 years” figure, and all the publicity it attracted, never existed.

And without that 2.23% downward revision of the March quarter median, there would have been no growth to speak about for the June quarter.

This calls into question the validity of the latest data which, among other things, claims an 8.4% annual rise in Melbourne’s median house price.

If that were so, Melbourne would be the national leader on house price growth, topping Darwin and Perth. The Herald Sun enthusiastically reported that Melbourne’s housing market had “taken a $44,000 step towards recovery” after “an impressive 8.4% was added to the city’s median house price”.

I’m not sure what to believe. This is especially so because data from other sources does not concur with the REIV figures.

In the March quarter, other research sources recorded only minor annual growth for Melbourne. The Australian Bureau of Statistics reported an annual rise of 1.1% while RP Data said house values were up just 0.3%. But the REIV saw a rise of almost 5%.

The REIV’s figures for the June quarter claim a quarterly rise of 2.4% and an annual rise of 8.4. But RP Data has reported a quarterly decrease of 0.5% in its value index for Melbourne houses and an annual rise of only 3.3%.

Will the September quarter figures from the REIV report another surge in values, assisted by a downward revision of the June data?

I’m particularly skeptical because this is not unusual. REIV figures are always more bullish than those from other sources like RP Data, the ABS and Australian Property Monitors.

We can debate different methodologies and the conflicting results they produce, but there’s a consistent pattern over a number of years of the institute reporting growth figures that don’t correlate with anyone else’s data, including on prices and auction clearance rates.

My view, as I prepare to discuss Melbourne in detail at the Property Observer webinar on 31 July, is that there is moderate growth in the city’s markets overall, but it’s nowhere near the optimistic view from the REIV.

Terry Ryder is the founder of hotspotting.com.au

Terry Ryder

Terry Ryder

Terry Ryder is the founder of hotspotting.com.au.

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