One of the many ways in which news media misinforms consumers about real estate is by placing enormous significance on month-to-month statistics.
If the price growth data from one source says the growth last month was less than the month before, then the good times are over and we’re headed for a downturn, apparently.
Terminology such as nosedive, plummet and “fall off a cliff” start to populate headlines right across the media spectrum.
And then next month the numbers may show a rise in the monthly rate of price growth – and suddenly the market is booming again.
Words like soar, and skyrocket, and supercharge will litter the air waves.
The reality is that month-to-month data is meaningless.
Whether its median prices, or rents, or building approvals, or vacancy rates, or sundry other data sets, the change from one month to the next tells us nothing that matters.
One month does not constitute a trend. If the decline in the rate of price growth is evident again next month and the month after – and if other research sources publish figures with a similar message, then perhaps we can start to attribute some significance to the data.
But often the month-to-month figures are up and down. The graph is seldom smooth.
Media got carried away in early August when the new monthly price report from CoreLogic indicated that dwellings values nationally rose 0.7% in July.
The previous month, in June, they rose 1.1% – according to CoreLogic.
It’s important to remember that other sources have different figures – be they PropTrack, or Domain, or SQM Research, or the Bureau of Statistics.
But CoreLogic, the biggest media tarts in the business, never let the facts get in the way of free publicity, so they milked the small decrease in the rate of month-to-month growth for all it was worth – even though it was, essentially, worth-less.
It said that the figures mean that markets are slowing down.
But there’s no significance in that number at all.
It’s a generalised national figure which is meaningless if you live in Brisbane, or Sydney, or Perth, or Regional Queensland, or Regional South Australia, all of which grew by a lot more than 0.7% in July – according to this one source, which is one among many.
It’s even worse with auction clearance rates. These figures are published weekly and if this weeks’ alleged clearance rate is lower than last week’s alleged clearance rate, then massive significance is attached to numbers.
This happened in early August where one of the clearance rate gurus declared that the preliminary clearance rate had slipped below 70% – only marginally under the apparently magical figure of 70%, but media went to town on that one as well.Then there’s building approval figures, often the most volatile of the data sets.
Disaster was predicted recently when the latest figures from the Bureau of Statistics found that dwelling approvals fell 8% in June, with media attributing great significance to the dire downturn.But in the previous month, in May there had been a 20% increase in dwelling approvals.
Who knows what the next set of official figures will show for building approvals in July.
The only certainty is that the media will sensationalise whatever the results are – thereby adding to the great seething mass of misinformation that afflicts real estate consumers across Australia.
