The mumbo jumbo of politics and property data

The mumbo jumbo of politics and property data

So let’s clarify a few points from an insider’s perspective. Property data is in all probability, ages away from being conclusive (after the result) and why, today does it still remains a dog’s breakfast?

Collectively none of these data collection institutions get it – they spread it and sell misinformation that is simply incomplete and many months away from accuracy.

The dilemma is quite simple. The property aggregators sell the information gathered from the agent, then continue to charge agencies to access its data … which is actually, the intellectual property of the agent. Until they get it right there is a very strong argument as to why agents should cease providing such data.

There are no better examples of such anomalies, when this week, the Australian Bureau of Statistics (ABS) announced that house prices fell by minus 2.2 per cent in the March quarter 2009. Australian Property Monitors (Domain Property Data) reported that its research identified that house prices increased by 0.1 per cent in the March quarter 2009. Australian Property Monitors works from exchanged property information and it is no secret that in the current market condition, many vendors instruct agents that the sale price is confidential and not for publication.

Therefore, it can take months (depending on settlement terms) to collect an exacting position which I will identify with the data I have collected. For the record, RP Data – Rismark reported that house prices were up 0.1 per cent in the March quarter 2009. I remain unaware that we supply any data to RP Data – Rismark. I would also add that RWM receives no payment for supplying any property data.

    Mosman House Sales – 1 January 2007 to 30 April 2007

  • Total sales – 139
  • Total value – $350,165,720
  • Median price – $2,200,000
  • Average price – $2,632,824
  • Highest price – $10,200,000
  • Mosman House Sales – 1 January 2008 to 30 April 2008

  • Total sales – 119
  • Total value – $309,519,612
  • Median price – $2,700,000
  • Average price – $2,919,000
  • Highest price – $8,500,000
  • Mosman House Sales – 1 January 2009 to 30 April 2009

  • Total sales – 62
  • Total value – $86,621,000
  • Median price – $1,525,000
  • Average price – $2,221,051
  • Highest Price – $8,500,000

Source: Australian Property Monitors (Domain Property Data) owned by Fairfax Media

I would suggest that property voyeurs are much more interested in niche markets , for example, Mosman, as against “stew” markets where all the data ingredients are fed into the one murky pot.

As you would have noticed the Mosman House Sales – 1 January 2009 to 30 April 2009 look a tad sick when compared to 2008 and 2007. So when I add our confidential house sales to the data the Total Sales move up from 62 to 71, Total Value from $86,621,000 up to $126,026.000. For the record, RWM has sold the greatest volume in terms of number of sales and total value over this period. The Highest Price also changes where the first number starts with a one (in excess of $10,000,000). This additional $39,405,000 in house sales makes a noticeable change to the current figures. It’s just that now you are the first to know and the aggregators are left shaking their respective heads. This is further complicated by the fact that the vast majority of sales data provided today leaves out the sale price.

I had trouble containing my excitement this week when an old favourite, Bobby Dazzler Carr, made an unexpected appearance, spruiking further debate about the condition of his once beloved Fort Crumble. Obviously, his work time sheets must now be down after he moved from Fort Crumble over to the Millionaires Factory.

The audacity of the argument that the Dazzler was the architect (or should that be builder) whilst presiding over the State of Decay. Whilst stopping short of revealing just exactly where all those “rivers of gold”, disappeared to, on the back of the financial floods from GST, stamp duty and poker machines taxes proved to be of little consequence. It was the system, not, the government the Dazzler declared (to those that listened – not many I think).

Of course it was , how silly of us to assume anything else as Fort Crumble now stumbles down an estimated $2 billion budget deficit by June 30. Just as interesting, south of the border, Victoria’s Fort Fabulous is in surplus and offering tax cuts because Jeff Kennett did what our very own Dazzler couldn’t deliver, while Kennett financially and politically, renovated his Fortress.

Tensions between Ruddy Fantastic and the latest landlord over at Fort Crumble are not that good to say the least. Ruddy Fantastic is presently conducting a three day jobs summit in Western Sydney, and no members from Fort Crumble were asked to attend – another clue?

As quick as a flash, Fort Crumble jumped the land tax rate for property valued above $2.250 million from 1.6 per cent to 2 per cent. The irony is that these properties are already (after tax) in negative rental return, so the landlords then increase their negative gearing tax deductions, which Ruddy Fantastic then picks up.

Will negative gearing be abolished in next week’s Fudge-it?

One should also not forget, that Fort Crumble is reportedly crunching the numbers to introduce its latest annual land tax grab which apparently applies to every property owner within the State of Decay. If true, this would be political suicide – but then again, when you have a $2 billion budget deficit Fort Crumble is now in critical decision or, should that be condition? Ruddy Fantastic would be thankful he resides north of Fort Crumble’s moat.

Next week’s Federal “Fudge It “ will be riveting, more particularly if the budget deficit blows in (or should that read out) around $70 billion as quite a few are predicting.

With elected politicians in overdrive on their Twitter accounts all will be revealed on next week’s Tweet’s – if you are not on Twitter, you don’t know what you are missing out on. Have a look http://twitter.com/ Compelling viewing indeed – love Twitter.

We are very happy to announce that each week we will showcase one of Tim Mooney’s aerial masterpieces in Virtual Realty News. Tim has been a subscriber for many years. After prolonged negotiations – we now can bring you these amazing shots exclusively. Tim has actually spent more time in the air than Superman – if you click on this week’s aerial photograph you will be taken to Tim’s website.

Cheers and Tweet’s ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales http://www.rwm.com.au/news/

7 Responses to “The mumbo jumbo of politics and property data”

  • AF says:

    What am I missing?

    The average price if calculated from the total sales and total value data provided does not equal the average price quoted.

    2007 quoted = 2,632,824 2007 by calc = 2,519,178
    2008 quoted = 2,919,000 2008 by calc = 2,601,005
    2009 quoted = 2,221,051 2009 by calc = 1,397,113 or 1,775,014

    Can you explain the significant difference please?

  • AF – maybe I was to polite when I referred to the aggregators as being a dog’s breakfast. The simple truth: we have no idea why there are such amazing discrepancies in the APM calculations. Actually, at the very same time you commented – our accountant was asking me these same questions so I am pleased to see how thorough our subscribers are. Last night, I too noticed this so I was interested to see who else picked up on these also.

    I have referred the matter to Domain Property Data for an explanation which I believe will be forthcoming. Watch this space!

  • Gordon says:

    We might also note that Bobby-Dazzler Carr will go down in history as the person who ensured Sydney will have water supply problems into the foreseeable future.

    The first thing he did when elected 14 years ago was to cancel the new dam that was planned to provide the needed capacity upgrade for the system. This was to pay off the Greens who (as usual) had directed their preferences to the Always Lacking Party.

    The result 14 years later? No extra dam, no water and an obscene bill to construct a desalination plant that will harm the environment, cost a fortune to run and consume a huge amount of carbon-inducing electricity. Some conservationist.

  • Nick says:

    The averages are also skewed when shown by quarter, as more expensive or less expensive properties could have been sold in one quarter in one year compared to another. I think total year statistics are sounder, yet equally flawed for the same reason.

  • Hi Robert

    We have put together the following for you on the differences between APM, RP Data and ABS – and leave for you to edit for your site as appropriate – some of the quotes have come from other published articles and there are comments here relating to the ‘top end’ that you may wish to dilute given your market.

    See you Thursday

    Cheers, R
    Reece Coleman
    Director, Real Estate Services

    Fairfax Digital
    Level 2, 1 Darling Island Road
    Pyrmont NSW 2009

    In the past week, APM, RP Data-Rismark and ABS all released house price statistics, creating much debate about who’s figures to trust. To shed some light, the following will help explain some of the detail behind property statistics and where APM is positioned in the pack.

    APM uses a “composition adjusted median price series,” a methodology developed with the RBA, that takes into account compositional biases of properties. Put simply, we stratify suburbs into 10 different price bands and average the price movements over time across all these bands. APM publishes these prices series on a quarterly, basis which assesses property sales information collected over the three month period.

    APM figures show house prices rose nationally by 0.1 per cent in the first quarter of 2009, while unit prices increased by 0.5 per cent. This is consistent with recent levels of activity from first home buyers, strong auction clearances and record low interest rates.

    The ABS house price index also uses a stratified median price index method, but only considers “detached” houses.” Other semi-detached properties such as apartments, terraces and villas are excluded. The ABS also relies on data from the banks and is affected by the longer loan approval times and lag in receipt of real-time information.

    According to the ABS, Australian established house prices actually fell by 2.2 per cent over the first quarter of 2009. The ABS index appears to be biased towards the top end of the market which has experienced the largest price falls in the past year.

    RP Data-Rismark uses a “hedonic” regression approach that measures the actual changes in dwelling values through time rather than changes arising due to compositional bias (e.g. more western Sydney property trading than homes in the eastern suburbs).

    RP Data-Rismark reported national dwelling values increased by 1.52% for March 09. Key differences with the RP Data – Rismark published data, is it assess activity for the month end to March and not the 3 months to March as with APM & ABS.

    APM research has shown month only figures suffer from considerable volatility. In addition, RP Data – Rismark has not reported values for houses and units separately.

    However, due to growing focus on this debate, RP Data – Rismark’s Chris Joye commented that “using the end March monthly data over end December the index was up much more strongly-by 1.6%” … and …“On a quarterly basis, the RP Data-Rismark Index was up 0.1 per cent in the period to end March 2009 (which compares well with the APM result of circa +0.2 per cent)” – assuming the appropriate weightings are applied to combine APM’s houses and units figures together..

    Other respected market commentators have also weighed in on the debate and supported private sector reports over the official ABS figures.

    Rory Robertson – Interest-Rate Strategist Macquarie Debt Markets Division (Sydney)
    “For what it is worth, my guess is that the RP Data-Rismark and APM indexes provide a more reliable guide to recent developments than does the ABS index; for me it boils down to a case of two against one, noting that these private-sector data-providers live and breathe every snippet of information on home prices.”
    Christopher Joye – Managing Director Rismark International
    “Importantly, these results are consistent across APM and RP Data-Rismark, which are believed to have bigger samples than the ABS. They are also consistent irrespective of whether we estimate a simple stratified median house price index, like the ABS and APM, or a hedonic regression model Like RP Data Rismark”

    Matthew Hassan –Senior Economist Westpac
    “we are inclined to give the benefit of the doubt to the more consistent picture presented by finance approvals, private sector price measures and auction clearance rates”

  • Hi Robert

    Thanks for the query on the calculation of how Domain Property Data calculate the ‘average suburb prices’ per suburb.

    Let me use the Mosman House Sales – 1 January 2009 to 30 April 2009 to explain.

    The number of sales reported on Domain Property Data is the total number of all properties reported as sold regardless of whether the price has been reported to Domain Property Data or not, ie. it includes properties reported as sold and the sale price marked as ‘Price withheld’. For the four months to 30 April, 62 properties have been reported to Domain Property Data as ‘Sold’.

    The average however is calculated only on properties where the price has been reported to Domain Property Data – of the 62 sales transactions, only 39 have currently reported a sale price.

    To explain, we have 62 sales in Mosman reported to Domain Property Data, 23 are marked ‘price withheld’ and the other 39 sales total $86,621,000.

    The average price on Domain Property Data is currently calculated as $2,221,051 (ie. $86,621,000 million divided by 39).

    Over time we will gather more sales data from the Valuer General and the accuracy of this figure will improve (ie. we collect the sales results for the properties marked ‘Price Withheld’).

    We would love for the calculation to be based on the absolute total value of properties sold. For this to happen we need all vendors and agents to report the actual sales price to Domain Property Data and stop marking sales as ‘Price Withheld’!

    It is for this reason that we recommend and use the ‘Median price’ as a more appropriate indicator of the market.

    Hope this helps in explaining the calculation

    Regards

    Reece Coleman
    Director, Real Estate Services
    Fairfax Digital

  • Patricia says:

    The lack of transparency and poor methodology in aggregated sales data is laughable. Further, the Australian property and media industries regard selling prices as a priceable, tradeable commodity – hence, the lack of free and easy access to the sale price of a specific property once settled. In the US, there are numerous property websites that provide this information for free, and many US local governments provide this information via their websites. Here, one must pay upwards of $40 for property price reports from an aggregator. I note that RWM provides this information as a complimentary service to VRN subscribers.

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