Australia’s housing data cull will cut transparency

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By Leith van Onselen

SQM Research last night released its weekly newsletter, which contained some interesting commentary from managing director, Louis Christopher, on the recent omission of first home buyer statistics by the Reserve Bank of Australia (RBA), as well as the flagged culling of the Australian Bureau of Statistics’ (ABS) property price index due to Budget cuts:

It seems the RBA has dropped off the FHB statistics from their monthly chart pack series as reported by market journalist, Michael Pascoe. Certainly their data has raised eyebrows with it constantly reporting record low First Home buyers as a percentage of total buyers in the market. There has been mounting concern that the measure doesn’t report all First Home buyers, particularly the ones who don’t receive a grant when they buy.

So far, there has been no word from the RBA on the reason why they have done this but if it is as a result of the Bank being concerned over the reliability of the findings they may well wish to take a consistent approach to other property market statistics.

The other news that came out late last week was the announcement by the ABS that they are considering on scrapping their quarterly house price series. As you can see from the quote below, taken from the ABS website:

  • Review the House Price Index, with the view to discontinuing it pending identification of alternative sources to meet the Australian National Accounts and other requirements”

I cannot say enough what a step back this is for the transparency and objectivity of house price information at the national, macro level.

The index provides a strong back bone of independence and credibility. It has been a solid benchmark overtime to compare the private property data providers too. Recently it made some improvements by offering an index on units and all dwellings.

Sadly, the ABS dwelling price series has been less reported on by the major media players who love to put out a different story on the market week by week, month by month, primarily using the unreliable RP Data Daily index.

Despite absolute proof that the daily index is an unreliable indicator of dwelling price movements on a short term basis, it still gets a massive run in the main stream media. No doubt a combination of the demand of a 24 hour news cycle, uninformed and stretched journalists, plus commercial agreements between RP Data and some of these outlets such as News Limited ensure that the appalling index will always get coverage no matter how bad it is.

As Terry Ryder described here, this index reported a property bust back in May last year, then a boom in June, then the boom was over in October followed by a boom in January and now a crash in May. It’s all over the place and is highly reliant on the community’s collective amnesia.

As we stated back in 2012 – the index is unreliable. And recently, after all the fan fare on its launch, it appears the ASX is no longer making it a priority for an exchange tradable product based on this index.

In this twitter exchange Cameron Kusher from RP Data states the ASX no longer has priority on the exchange traded product.

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One wonders too whether they even received or even requested ASIC approval, which is required for such a product.

For what it’s worth, I share Louis’ frustrations over the proposed culling of the ABS property price statistics. The ABS property price series is based on land registry transfer data provided by the states. It is 100% accurate and the measure by which I, and many other analysts, use to benchmark the private sector data providers’ results against.

Culling the ABS’ series would, therefore, significantly reduce the reliability and transparency of housing price data in Australia, saving an insignificant amount of taxpayer money, whilst adversely affecting Australia’s $5 billion residential property market. Making such cuts does not add up.

18 Responses to “ “Australia’s housing data cull will cut transparency”

  1. bobalot says:

    Looks like the Abbott government wants less transparency for the housing ponzi. Who is surprised?

  2. Pfh007 says:

    “…..whilst adversely affecting Australia’s $5 billion residential property market. Making such cuts does not add up…”

    Now that’s deflation!

  3. sydboy007 says:

    As Abbott says, no news is good news.

  4. Gunnamatta says:

    The only way to address this is for people prepared to put the young, their home buying aspirations, and the economy in which they will service those purchases, to be elected into parliament – state and federal.

    Basically we have both sides of mainstream politics, the RBA, the politico-housing complex, and much of the media showing every sign of wanting to ignore them with a form of 21st century serfdom, seen as the easiest way to address a massive credit binge ploughed into residential real estate by those older than them.

    It is time.

    • Josh Moorrees says:

      It gets talked about a lot on here but I think you’re right, it is probably time.

      Personally I’d be willing to have a tilt at it either level starting a new party along the lines economically of what is often talked about on here. I mean I couldn’t do any worse than the motoring party enthusiast senator right?

      Main problem is I wouldn’t have a clue on all the procedures and whatnot that needs to happen behind the scenes. Plus I’d think we’d need a number of people to stand for a critical mass.

  5. migtronix says:

    This is good news, anyone with a casual acquaintance with roulette knows the existence of the green/0 changes the odds remarkably. Ergo, if this series is collected/reported later on the gap will ensure the product is questioned for a long time…

  6. sbinder says:

    While I agree official data is a public good, and transparency in important markets is useful, I do wonder what a backward looking piece of information like this actually does for anyone buying a house as shelter.

    Perhaps the composition of the market buying around you is less important than some more fundamental analysis. As in, can I afford this? This is more important for investment properties, which have escaped investment logic for a little while now (nice tax refund though).

    But for the money they are looking to save, you would probably do it anyway.

    Which then leads me to think that possibly the ABS does not think the information is reliable (because of the source) and/or that it actually has very little utility to those officially monitoring house prices, for regulatory effect. Say, APRA.

    • Hector says:

      The ABS and its datasets exist for reasons other than “forward looking” homebuyers.

      • 8 Capital Cities is based on land registry transfer data provided by the states. It is 100 per cent accurate. The ABS’ role in adding these together is very modest. The savings in ending the series are insignificant.

    • Fabian Aldersey says:

      I haven’t heard any concerns about data reliability. It likely boils down to “there are other sources of information out there which sufficiently meet users’ needs”.

      That being said, it’s up for review, not definitely out. Let’s see what user reaction is like.

      • gonderb says:

        I don’t think anyone has said the ABS house price index is unreliable. Comments re possible unreliability pertian to recent (last couple of years) first home buyer proportion figures reported as a part of the housing finance data series.

    • sbinder says:

      I’ve made myself a victim of not reading (or writing) with thoroughness.

      Agree entirely that the scrapping of the ABS house price index would be a backward step.

      I also agree that it is not only useful for forward looking homebuyers, but the hysteria for most of these changes is most visible in these areas.

      I was more commenting on the already ceased new home buyers stat’s put out by the RBA. But could have been much clearer.

  7. myne says:

    “When it becomes serious, you have to lie.”

    -Jean Claude Juncker

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  9. I wouldn’t mind seeing the ABS property price indices scrapped, but the state data provided by the LTO or VG used to create them should be made publicly available and easily found so that individuals or private companies can use the data to create their own measures.