Making sense of what is happening to house prices has to be one of the most difficult things for home owners and investors to do.
Firstly there is a wealth of data, mainly from QV and the Real Estate Institute (REINZ), which you can use to interpret yourself. This is raw data on sales which you can use to draw your own views. We collect the REINZ data and provide some tools to track and compare what is happening
here.
Over the top of that there are numerous commentators, some expert and some not.
A couple of pieces of news this week caught my attention and are helpful in understanding these two groups of information.
The first is a piece by Alistair Helm which compares and comments on the
differences between QV and REINZ data. Each organisation collects and reports things differently and often they can seem to tell differing stories.
The second piece comes from BNZ chief economist Tony Alexander who summed up well in this week’s newsletter, his thoughts on some of the “commentators” who end up in the media and why they seem to have gone quiet. The key reason they have gone quiet is because the market isn’t tanking, but showing signs of recovery.
I have included some of Alexander’s views here as they are important:
“One doesn’t hear so much now from those who have been picking a 40% fall in NZ house prices. It has always been a mystery to us how one could generate such apocalyptic forecasts.
“In the case of one mild profile individual, one could simply put it down to a lack of experience and qualifications in the field of economics and a desire to say something controversial to make money from people clicking on a website.
“For another individual the reason is probably that they have been predicting a property market collapse since at least 1988 when one first heard them speak.”
I agree with Alexander and suggest that people need to understand a bit about people who are making forecasts, what their experience is, but more importantly, what their motivation for commenting is too.
One can argue bank economists are always saying things to please their masters and help drum up business.
My experience is that bank economists give fair and frank assessments. They aren’t out there saying things just to help drum up business and they aren’t just glorified PR merchants.