Knee-jerk responses to short-term data sets from economists, journalists and often from the big-name research houses create a mass of confusing, conflicting and contradictory commentary.
The commentary around price data is the worst example of this.
For a long time, the biggest problem for consumers trying to make sense of market events has been commentators putting too much importance on short-term results.
Real estate is a slow-moving and long-term business – and data showing one month’s change in median house prices is meaningless.
Yet what we have had recently is commentators, economists and journalists declaring a downturn in national real estate based on one or two months of lukewarm figures.
And then, with the publication of the February price data, suddenly the downturn is declared to be over and the boom is back on. Seriously?
The major research organisations have analysts who have been around long enough to know that this is nonsense. I suspect they don’t care, as long as it generates headlines.
We have to remember that their motivation is not to inform us or help us, but to generate cheap publicity.
The headline on a press release from one data house on the third of March declared:
Housing Downturn Reverses in February!
Housing downturn? Did we have a housing downturn?
And how long had this downturn been under way, before it suddenly reversed in February?
Two months, apparently. A two-month downturn and then a miraculous recovery! You have to wonder: are they really that stupid?
And what was the figure that prompted them to declare the supposed downturn was over? A monthly rise of 0.3%!
That’s right, folks, a 0.3% increase in the national median price is enough for alleged experts to decide that the downturn we didn’t know about is already over!
And, behind that national figure, three of the capital cities recorded zero growth in February.
It is perhaps more pertinent to look at what the figures say for the latest quarter – three months of data is more meaningful.
The key points in the quarterly figures include these:-
Perth house prices are no longer growing, providing further confirmation that the Perth boom has well and truly passed its peak
Adelaide, Darwin and Brisbane had the best growth among the capital cities – but some of the regional markets had the best quarterly growth, including Queensland, South Australia and Western Australia.
Sydney and Melbourne house prices were down about 1% over the quarter. Both showed small increases in February but it’s too soon to say whether this is a serious recovery.
In the unit markets, there was solid quarterly uplift in Brisbane, Adelaide and Perth (the unit market in Perth is doing better now than the house market, as we predicted) – and those three key regional markets (Queensland WA and SA) continue to do well.
The key message from all this is that one month’s figures are meaningless. They do not constitute a trend that is worthy of major headlines – but that won’t stop news media from telling us that the fictional downturn is over.
