Property musings on Facebook - 24 October

by Alistair Helm in


Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.

 

1st home buyers should look to apartments


Same data / different story

by Alistair Helm in ,


I remember hearing somewhere that it was bad news that sold newspapers - apparently not so when it comes to property!, or so you would imagine if you read the recent headline from the NZ Herald detailing the September results from Barfoot & Thompson.

The headline: "Auckland house prices rise to a record, as more million dollar homes sell".

Reading the article after I had reviewed the numbers from Barfoot & Thompson's report on their website got me thinking. How different the article and quite possibly the headline might have been if the reporter had reviewed the data rather than just the press release.

Here are the first 2 paragraphs of the article as published:

Auckland house sales rose in September, snapping three previous months of decline, as more houses with a $1 million price tag pushed the average house price to a record, according to Barfoot & Thompson.

The number of sales rose to 959, from 909 in August, although below the 1,105 sold in September last year, Auckland’s biggest realtor said in a statement. The average sales price rose 3.8 percent to a record $738,876, and was 12 percent above last September’s average house price.

No let me using the source data from Barfoot & Thompson September report and provide an alternative 2 paragraphs:

Auckland houses sales continued to fall in September, the 8th consecutive months to see sales fall on a year-on-year comparison. Significantly sales of properties in the $400,000 to $600,000 price range saw falls of 22 percent.

The number of sales at 959 were 13 percent below September last year, Auckland’s largest realtor said in a statement. The median sales price continues to go sideways at $635,000, a trend that has been seen for 4 months now since a peak of $645,000 was reported in May.

The facts are simply the facts. It is just that the NZ Herald decided to copy and paste the press release from Barfoot & Thompson and I chose to spend a bit of time looking at the key facts. 

When it comes to reporting on the property market and presenting facts there are some key points to bear in mind that are critical to helping make a more informed decision as to the article:

1. Sales data is only relevant when compared with prior year. Property sales are seasonal. There is no value in comparing one month with the prior month unless it is seasonally adjusted data. Here is the representation of Auckland sales by Barfoot & Thompson to demonstrate the state of sales:


2. Average sales price is not an accurate and trusted measure in property sales reporting. The range of property for sale especially to the high end of value can have a significant impact on the average price. Let me show you. Lets say that the September 2014 sales had been the same - 959 but instead of 161 sales over $1m there had been just 146, 15 less properties sold over $1m (that 146 sales is how many properties sold for over $1m last September) and then lets say that an extra 15 properties sold at say $700,000. This scenario would have seen an average price of $710,000 - that is $28,000 less than the actual all for the sake of 15 properties! - that is how misleading it is to quote average prices.

3. Median price or better yet the Stratified median price is the most respected and trusted method of tracking house prices. Here is the median price for Auckland properties sold by Barfoot & Thompson measured by median price which shows the levelling off.

4. Real estate companies have a vested interest in presenting favourable articles based on statistics. They want to be seen as selling more than other companies or reporting higher prices or indicating that it is a great time to buy or a great time to sell or that there is a shortage of listings or a massive selection of listings. All of which as you can judge are often conflicting situations, 

 

As a final thought, researching the quote that 'bad news sells newspapers' I came across this article from The Guardian ( a media source I trust) who in a 2007 article on just this subject made the observation "peoples' interest in news is much more intense when there is a perceived threat to their way of life". It got me thinking - of course rising house prices, especially at the level they have attained in Auckland are what might be thought of as a "perceived threat to their way of life" - so maybe in the case of property news good news is actually bad news and the team at the NZ Herald are the smartest guys in town!


Property headlines continue to promulgate misinformation

by Alistair Helm in


Misinformation shutterstock_182720795.jpg

Too often over the past few months I have taken to Twitter or Facebook to express my frustration at the flippant manner in which newspapers (and as this is Auckland, NZ I can really only reference The New Zealand Herald) have created inflammatory stories related to property with no other intention that to create a eye-catching headline through which to succour eye-balls and through this to satisfy advertisers or to sell newspapers to again satisfy advertisers.

Just today the article reads "Frantic Auckland buyers rushing in to snap up homes"

Here is the conversation I started on Facebook on this topic promoted by the Herald article.

To often the response I generate from the online comments are typified by this one today “Never let the fact get in the way of a good story”.

Well I am not going to apologise for stating that I think, that when it comes to the property market and people’s largest investment and financial liability we should expect to see a more balanced and well researched insight into articles on the state of the property market from what the media likes to refer to as professional journalism, especially at a time when they seek to differentiate themselves from what they like to refer to when it suits them as bloggers.

We don't see eye-catching headlines which “never let the data get in the way of a good headline” when it comes to the NZX analysis of listed companies, yet the total value of NZ property ($725 billion) eclipses the NZX by a factor of 8 times so why should we accept it from articles on the property market?

At the core of the problem in my opinion is the fact that the real estate industry at all levels and all structures can’t seem to help itself in talking-up the market as if the industry itself was the oxygen of the market or that in someway they had to justify the performance of the market.

When was the last time you read an media article either from a real estate company, quoting a real estate company or even from the organisation representing the industry where they accepted that the market was down in sales volumes or price and was likely to stay that way for sometime to come? Too often these articles are full of justification - its because of the election...., there were more holiday this month......, the weather caused..... , a shortage of stock caused…., at this time of year sales always fall.

It is well known that real estate agents fair poorly in any rating of credibility or trust - the most recent poll had agents at 44th place out of 50 professions, rubbing shoulders with journalists (there might be the issue!) car salespeople and sex workers. When might this ever change? 

The reality is it will never change as long as the industry continues to believe that they must coat every piece of data in a very sickly dose of sugar coating. Don’t they realise that the public are more and more able to access insight and knowledge themselves and make objective assessments that leaves the industry looking somewhat like a fraud. As for the media and their complicit support. I have expressed concerns as to the potential for influence by the real estate companies who let’s not forget plough million of dollars into the coffers of media companies (the newspaper companies) every month and who directly or indirectly could believe that they therefore have some right to have their opinions and sugar coated perspective promoted.

Property, rightly or wrongly as we all know is our largest asset class in NZ - a vast number of people judge their wealth and financial stability upon their family house and the small investment portfolio of rental properties they own and manage. Largely as a function of this people still continue to be attracted to this investment strategy to “support retirement” and will unfortunately continue to be influenced by these type of media articles and property reports. Let’s recognise this and see if we cannot seek out some more balance in these articles, that’s all I ask.


Will the last to advertise in the newspaper please switch off the machine!

by Alistair Helm in


I am not, to be honest too sure as to my reaction to the all too frequent local newspaper that is stuffed into our letter box. To call it a newspaper is challenging that definition as it is by my simple calculation 62% adverts including advertorial and around 15% stories - not the newsworthy type; the balance being adverts from the newspaper itself.

The paper I should also point out is now reduced to just 8 pages - why do they persist in this industry - can it be profitable? I wish to be honest, it wasn't stuffed into our letterbox; after all we do have a prominent "No Junk Mail" sign on it and to my mind, this is junk - equal to a flyer for some restaurant or grocery offer - but don't get me started on junk mail.

Anyway; why I have no idea, but I did scan this thin paper and was stunned to see the classified section at the back still has a Real Estate section. Long gone are the days when this would have had columns and maybe even pages of adverts for property for rent or sale - a very lucrative business in its day. Now that space is taken up with a solitary advert from the publisher, trying to entice a local real estate agent to "profile yourself and your services where it counts - in the papers that service your areas". How many agents have taken up this opportunity? - none!

The writing has been on the wall for years - people looking for property to rent or buy go online. People looking to find an agent go online. The end for newspapers is drawing closer, it's demise started as the classified dollars started their migration online - first it was cars, then jobs and now real estate, there's not much left to support these dinosaurs of a bygone era.