We seem to have opposing views as to the state of the housing market and all eyes are on the Reserve Bank Governor as to his take on this twist in the property soap opera.
In the left corner representing the state owned enterprise QV we hear that the average price in November was $393,198 with prices now having fallen for the 3rd straight month.
In the right corner representing the Real Estate industry we have REINZ who states that prices have actually increased with a median price in November of $352,000 up from $350,000. This on the back of an increase in sales volumes of around a thousand from October.The key in this tussle is not the motives of the reporting agencies but the principle of where the data comes from and how it is reported. As the old saying goes – there are lies, damned lies and statistics!
The reported statistics from the Real Estate Institute are the easiest to explain. They collect reported unconditional sales data from licensed real estate agents around the country every month – in November there were 7,837 house sales and in the month of November the median price was $352,000. Now a key here is the statistical metric of median price – not average price. Median is the center point of a range in this case the 3,918th sales price when you line up the 7,837 sales from highest to lowest.
QV data is not as easy to explain. Their source of data is the local councils. This data comes in to them slowly over the months following legal settlement of sale that is why they report a figure for data collected for a 3 months. It is likely that the make up of data will cover sales going unconditional up to 2 to 4 months ago, which has trickled into the local authority stats in the past 3 months. Additionally they report average sale price – a very different statistic.
I hope this sheds some light onto why there are differences in the absolute numbers as well as the trends.
As ever with statistics, you will find as many people in favour of one presentation of data as you will another (average price vs.median price), however I firmly believe that timeliness of data should always be championed in reporting.
it’s quite wrong that a government agency (QV) seeks to comment on the shape of the current property market when its information is so out of date. how can QV say that it’s a ‘buyers’ market? their stats may indicate that, but the bulk of their information is months old – and we all know how quickly property prices can change in that short time. i can’t believe this information isn’t well known and widely distributed – it will certainly change the way i view this information from now on. thanks for the insight.
thank you for this illustration of language use.. since I’d commented to Interestnz about realty’s use of “median” as a nonsense, yours has more accurately addressed the topic.
My point, however, was to state that median – the word – is defined in maths as the exact midpoint of a range. Its utility goes along with terms like lower bound – the bottom edge as it were of a range; and higher bound. A range of course is not necessarily prices. It could be numbers, quantities, volumes.
So your expression median price truly helps in making sense of realty usage.
Allow me to suggest, however, that a hyphenated median-price would be the simplest statement of such usage.
Alternatively, and the one I’d preferred be adopted would be for NZ realty authorities to devise their own expression. An example being, for instance, the MPR (mid-price range)
correction.. url..the above now sorted..
kiwiwot
Your observations are appreciated. I think you have a valid point and the term mid-price-range is an elegant suggestion. Not being cynical however I am not sure the organisation of the Real Estate Institute is ready to make such a change. However if they are reading this I would hope they would consider it.