Issue 54 - Lies, damned lies and statistics… - August 2009
‘There are three kinds of lies – lies, damned lies and statistics’. So went a well-known saying variously attributed to British Prime Minister Benjamin Disraeli, Mark Twain and many others.
Unfortunately, there is a certain amount of truth in it. There is nothing quite as confusing as a whole welter of statistics muddying the waters.
Such is the case, I feel, with housing market statistics that are seemingly forever flooding over us.
For some months now I have been puzzled by newspaper references to prices being down x% this month compared with y% last month; particularly so as the prices in this area have been, overall, increasing. Most strange.
My first thought was ‘down compared with what?’ To say that a figure is down surely requires a reference point, but none was stated. It was a little like saying a ship was ‘500 nautical miles south’.
More recently, there was some explanation. We were told that the market was down by x% and y% from the same months a year previously – which is a little like telling us that our ship is 500 nautical miles south of where it was last time, but we still don’t know where that is in a huge ocean. We still don’t know how far it is from its last port of call.
As it turned out, the market was ‘less down’ in June than it had been in May so there was actually a rise in the market. Unfortunately, it was being shown in a negative fashion. No wonder people are confused.
Add to the above the confusion created by mixing statistics from ‘Auckland’ with those from ‘all of New Zealand’ and a very muddled view appears. Auckland residential prices went into decline quite some time before prices in, say, Southland. In fact, if my memory serves me correctly, Southland prices were still going up when Auckland prices started their descent.
The good news however, is that prices are now recovering in our little corner of Auckland. My reference point for Waitakere City is the 2007 revaluation of Capital Values.
Below, I have included three charts, being one each for Titirangi, Glen Eden and New Lynn. Note that the chart for ‘Titirangi’ is for the greater Titirangi area, which includes Green Bay and Laingholm.
You will see that our ‘fixed’ reference point is the 2007 revaluation of the Waitakere City Council area. The charts show the median sale of each area, by month, compared with the 2007 median valuation. The low point for Glen Eden was reached in November 2008, with Titirangi area and New Lynn reaching their low points in January 2009 with the trend since then being upwards. I’m quite confident that this trend will continue for 2009 and into 2010.
Now that we know where our ‘ship’ is, I feel even more confident.