A patchwork quilt of selected data does not make a property report
I seem to be getting more incensed by the number of articles that I read professing to foretell the trends of the property market which are loosely stitched together from a patchwork quilt of statistics. Another one this morning from the NZ Herald’s Property Editor – Anne Gibson headlines “Shortage of listings adds fuel to market”
The bye line then states “A shortage of winter house listings is putting more pressure on already rocketing prices”
From my experience and knowledge of the industry I could tell from the timing of this article it was not going to be based on the trusted sources of property data – REINZ / QV / Realestate.co.nz.
Let me walk you through the article and highlight what I think are the issues.
The primary data is from Harcourts. They report that listings across their offices in Auckland and Northland are down 38% in July compared to a year ago. Now Harcourts have more offices and agents than any other group in NZ (c.190 offices compared to c.140 for #2 Ray White) in Auckland and Northland they have 59 offices which is less than Barfoot & Thompson with 64 offices, not by much; but Barfoot & Thompson sales per offices are higher and regularly account for around 40% of Auckland sales. Therefore I would challenge the statistical robustness of the data as it is not appropriate to draw conclusions from one set of data for the whole of Auckland
What I find interesting and almost bizarre in this detail of listings being down 38% is the assumption that this is a function of the market. What happens if it turns out that across Auckland and Northland in July when the comprehensive data is published by Realestate.co.nz in their NZ Property Report that total listings are down 15% and Harcourts has therefore lost share and actually had a terrible month – without context of the total market they are leaving themselves exposed to competitive share attack!
The only really credible view of available stock and listings comes from the data of Realestate.co.nz. The website has the most comprehensive aggregation of all licensed agents and has data by month going back to 2007. This is the data of relevance. Out of interest I just checked the end of month inventory of residential property for sale in Auckland on Realestate.co.nz at the end of July was 7,263, at the end of June it was 7,461 - down 3%; compared to July last year it is actually up 7% - now these are inventory numbers not number of listings, but a theoretical 38% decline in listings would if across all real estate offices likely see a larger variance than this in inventory; unless sales volumes are up massively!!
The article then goes on to quote a single Barfoot & Thompson agent who states “(the) shortage was having an effect, particularly in suburbs close to the CBD. We are experiencing a tight market with a shortage of quality listings to accommodate our well-qualified buyers” – I am sorry but every agent says this and has a vested interest to say this. Their business model is to get listings, it is in their interest to support the view that there is a shortage and they have well-qualified buyers. Quoting a single agent and their recent sales is simply data – not insight or valuable information. Further I challenge the view that there is a shortage of listings.
The patchwork quilt of the data is then supported by Barfoot & Thompson data – not form July but from June, data that has already been published a month ago. Within a day or so we will have the latest data from Barfoot & Thompson for July, why not wait for this data?
The article ends with a comment regarding the statistics of the viewing audience of Realestate.co.nz which has seen “traffic to the site rose 56 per cent in the past 12 months, and now sees over 45,000 unique property hunters visiting every day". The fact is the traffic growth over the past year to the website is a combination of an advertising campaign coupled with significant issues within the industry between Trade Me Property & Realestate.co.nz which has significantly benefited the latter as an industry owned site being heavily promoted by agents which has raised its brand profile – not because we are seeing more demand from buyers. The data of 45,000 unique property buyers every day is at best puffery – yes certainly 45,000 unique visitors to the site of which are portion are active buyers, another portion are sellers and prospective sellers, leaving the large large majority as casual escapists – that is the nature of property websites the world over.
As to the view expressed in the bye line that we are experiencing “rocketing prices” – let the facts of this final chart destroy this myth showing as it does the trend of Auckland property prices increases / decreases over the past 6 years – the rate of increase is trending down – not skyrocketing!
At the end of the day what we see in these articles are blatant PR wars between real estate companies trying to be first to publish data which sadly gets regurgitated by copy-and-paste journalists which from one publication becomes an all-out race for all publications to ensure they also cover the story.