Alistair Helm, of website Properazzi, said it seemed that some market participants did not to want to reveal accurate information. “My view is that the loan-to-value rules have had more impact than some people are wanting to admit and it’s making a mockery of the data.”
There was no data available that accurately compared the prices of similar properties over time, he said. “What we’re seeing at the moment is dumb reporting. The institute is saying prices are growing and our members are happy, but no one knows the true figures… It annoys me that they’re not really helping the industry.”
The Real Estate Institute had access to much more detailed information than it produced each month, he said.
“Even without changing any collection process they could today provide far more accurate and valuable information on property prices. One of the fundamental problems with their data reporting is that they aggregate all property types together - be it a one-bedroom unit, a studio apartment, a five-bedroom home or a 20 hectare lifestyle property.”
He said there was no data in New Zealand that accurately compared similar properties’ prices each month.
There are two main indexes used to monitor price movements – Quotable Value’s, which reported nationwide prices up 0.1% over the past three months, and the Real Estate Institute’s House Price Index, which was up 3.4% in March compared to April.
Westpac chief economist Dominick Stephens said neither was giving an accurate indication of what was happening to prices. “The REINZ’s house price index measures average selling prices within each suburb, so it does adjust for where houses are selling.”
He said that was normally enough but the loan-to-value restrictions had changed the composition of the market so much, particularly in Auckland, that it did not seem to be giving an accurate reading. “The HPI will be rising faster than the true trend in house prices.”
He said Quotable Index gave better information, comparing sales prices to current valuations, but it was about three months older, because it only records when sales have settled and a technical glitch could have affected its March data.
“Both [indexes] are perhaps not telling us the full story right now.”
REINZ chief executive Helen O’Sullivan said it was possible that there had been some impact on the house price index because of the change in the proportion of sales under $400,000.
“[But] the bigger impact on the HPI in March was that, Auckland, with its higher median prices, increased from being around 30% of the sales to being 36% of the sales. The HPI is not an average,, it is a median, and when Auckland with its higher prices represents a higher proportion of the total of the sales it can have an impact on the HPI measure nationally, even though the component parts didn't increase by the same margin.”
She said REINZ would do some analysis in the next few weeks to see if it could adjust for the possible impact the change in the composition at the lower end of the market was creating.
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