From SQM Research’s free weekly newsletter:
The whole confusion and debate about housing price measurements keeps rolling on, largely at CoreLogic’s expense.
The debate was reignited once more when the Reserve Bank of Australia (RBA) realised that CoreLogic were trying to rejig their Daily Home Value Index in mid-year and did not tell anyone publicly, including the RBA themselves.
CoreLogic were caught out; and now everyone is asking why they won’t release the back series and full methodology to their adjusted Daily Home Value Index, which apparently has been recording a booming Sydney housing market.
In the meantime, the Australian Financial Review (AFR) ran one of the most informative and balanced articles on housing price measurements that I have read in quite a while, saying the CoreLogic index exaggerated the vigour of Sydney and Melbourne property markets. You will find it here. If you are interested in this topic (and so you should be!), please read it in full.
Sadly, a major conflict of interest occurred prior to the publication of this story in that AFR Columnist, Chris Joye, who helped design the original Core Logic hedonic index, seemingly got the heads up on this story and wrote a rebuttal even before it was published in the AFR.
Presumably the CoreLogic crowd also knew what was coming, as they too released a lengthy statement from Tim Lawless hours before the AFR publication defending their index.
As you may well expect, neither party acknowledged the rather obvious problems with the index in overstating price movements in Sydney and Melbourne, as the RBA made clear in a recent statement on monetary policy. Neither party addressed that the daily index seasonally fell in every May and June from when it was first released in 2012, which is extremely unlikely, until this year when CoreLogic VERY quietly tried to eliminate that problem.
Neither party addressed the secrecy surrounding CoreLogic’s rejigging of the index, as reported by the AFR here. Requests made by the AFR for a full release of CoreLogic’s adjustments weren’t responded to. Neither has Joye nor CoreLogic disclosed whatever happened to the plan to make a tradable derivatives market based on this index with the ASX.
I believe this complete lack of transparency, attempts to hide the rejigging of the index and refusals to release back series adjustments amount to appalling bad corporate governance that should disqualify CoreLogic from being an index provider to the RBA and other public authorities.
This is not what this country needs.
