By Leith van Onselen
last night released its SQM Research 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.
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.