Is daily house price reporting possible (part 2)


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From SQM Research’s Weekly Newsletter comes the sequel to last week’s report questioning the validity of the RP Data-Rismark daily home values index.

Following on from last week’s report, please find below the second part to this segment on data lag times and their effect upon readings for the various house price reporters.

Lets start this week with ACT:

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For the ACT, of the 756 sales records sent through during the month of May, the average lag time was 212 days, meaning that half the records sent throughout May actually represented sales that happened six months prior or even earlier. No sales records were reported through within 15 days of the exchange date.

Once again this is an appalling situation and may go some way to explain why RP data reported a boom (3.8% rise) in house prices for the March quarter, whereas at the same time, vendors were slashing each other’s throats – with asking prices falling by 3.8% for the same period, aswell as other data reporters recorded flat to falling house prices over the same time.

Remember, RP Data grab sales that occur from previous time periods to work out a present day index price which never gets revised. In contrast, other property data reporters (rightfully) just report on sales which occurred for the period reported on and revise their previous periodical results with data that has come through since that time.

Now Western Australia:

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For Western Australia, things are a little bit better. The average lag is 113 days based on based on 11,422 residential property records sent through for the Month of May. There were however, just 109 sales that were sent through within 15 days of the contract date. And of course, none were sent through on the day itself.

South Australia:

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South Australia is better still with an average lag time of just 59 days. That was based on 3,113 records sent for May. What is impressive is that there were 1,968 properties reported within 15 days of the property exchanging contracts. Funnily enough this has always been the state where the various data reporters have consistently had the highest correlation between each other with regard to the movement in house prices. That is because the data, unlike most other states, is accurate and timely. Note there are still no properties being sent through on the same day as they sold.

Northern Territory:

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Then finally, the Northern Territory where the lag time is better still at 38 days based on 266 properties sent through for the month.

So there you have it. In none of the states is there a situation where any sales are coming through on the same day as they sold, rather it is taking a number of months to come through. In nearly all states, there are a number of records that are literally taking over a year to get through, which generally represent newly constructed dwellings.

We received a lot of public interest last week on this issue and I see some have argued back in some forums that so long as the daily index is consistent then its okay.
But hang on, its’ not Okay.

Besides the moral issue of misleading people, if the daily readings of this index really represent a mix of sales that actually transacted months or even years back, then it is most likely the index will not be able to capture current turning points in the market, which it was supposedly designed to do.

Instead, all it will capture each day are just spasms of various historical market movements mixed in with the current market. No wonder the index recorded rises in Melbourne house prices in early 2012. It was still capturing and reporting on the last of the market upturn in 2010!

And no wonder the index best matches the ABS data when you lag it by a quarter. E.g the RP Data June quarter results from its daily index best match the March Quarter results from the ABS. Yes that’s right folks, this thing is behind the ABS house price series, not in front.

So for the June quarter, RP Data yesterday recorded a very soft 0.1% increase in house prices for the 8 capital city average. Noted of course they did not run with this number in their headline.
Nevertheless, this was precisely the same soft result for the ABS’s preliminary March Quarter Results.

In the March 2013 Quarter, RP Data recorded a strong 2.9% increase for houses. The ABS also reported a rather strong 1.6% rise for the December 2012 Quarter on their preliminary results.

In the December 2012 Quarter, RP Data registered a weak housing market with a 1.1% decline for houses in the Quarter. Meanwhile for the September quarter the ABS Registered a rather benign rise of 0.3%

And so it goes on. RP’s September Quarter result was a strong 2.2% while the ABS recorded a 0.5% increase for the June Quarter. Take the net result of those last two readings and you get a net increase of 1.1% increase from RP Data and a 0.8% increase from ABS. Except of course that RP Data lag the results by a quarter.

The group reported a 1.4% decline for houses in the June Quarter 2012. ABS had a 1.1% decline for the March Quarter 2012.

In each and every quarter, the fit between the ABS and RP data is almost perfect when you presume that RP Data are really reporting for the quarter prior to the one they are actually publishing. So this makes the preliminary ABS house price series a good predictor of the RP Data house price results and the RP data results a good predictor of…nothing. Or at best, just confirmation of what we already knew via the ABS a quarter ago.

So here is my prediction: Assuming this woeful index is still around next quarter, I predict that whatever the ABS comes out with for the June quarter, that RP’s September quarter result will closely match it!

Unconventional Economist


  1. Not surprising SA is ahead- given that’s where the modern Torrens system of title registration was introduced first.

  2. Not sure if this has been written about and it’s not so much about timing as the actual recorded price.

    Reportedly (!) for some distressed sales there is a rebate system in place so that the valuation is maintained.

    Is anyone else hearing anything of this?

  3. Excellent analysis by SQM Research. I do hope MacroBusiness you will finally take a cue from this and stop giving credibility to these farcical RP Data figures by reporting them every week. They really are best ignored as they add nothing to the collective knowledge here.

      • But why do you post them when you agree (I assume you agree?) with SQM Research’s analysis – that is that the figures are little better than throwing darts at a board. It’s really bad and not in line with the rest of your (excellent) blog. The RP figures actually obfuscate the truth, it’s worse than no data at all – because it’s data that paints a totally false picture of what’s really happening in the market. By posting the figures each week you give them credibility, you endorse them and that creates confusion about direction of house prices.

        • Like it or not, the RP Data house price index exists. And as long as it exists, I will post factually and unemotionally on its movements. Take from it what you wish. And if you don’t like it, don’t read it.

          Also, I don’t see how the index is factually incorrect. Sure, it might lag, but it isn’t “wrong”.

      • reusachtigeMEMBER

        Can you please only post positive upward movements so as to help build confidence in the housing market? Make sure your piece has a “celebratory tone” to it. Now that I have to actually pay for my fix of positive property news in the msm I need a new outlet. Thanks.

  4. Hello UE, don’t take this the wrong way and just a suggestion. It might be a good idea to place a disclaimer at the top of your blog each time you publish the RPData indices, something along the lines of

    ‘Disclaimer: the validity of this index has been questioned by reputable analysts and the data is at best 6 months out of date’

    That way readers will get a more educated view and not go away with so much of an impression of Macrobusiness endorsing the figures which is how it looks today with the 5x (?) updates every month on this one index.

    • Seconded. I count seven updates on CJ’s index for the last month, five weekly updates plus MB’s own monthly summary, plus a plug for RP’s official monthly summary when it was released later. This is overkill, surely?

      Particularly galling is the boom boom heading with this months summary accompanied by picture of rocket taking off for the moon. I mean, come on?

      Now we find out the index is bulldust, to put it mildly. I second the views of the others here, it detracts from this excellent blog by giving so much attention to a deeply flawed set of data.

      IMHO, best approach is to report on it monthly, and include the disclaimers suggested by overflow.

      • Seriously, get over it. Last month, when the index showed prices falling by 1.2%, this is the picture that I showed (click to view). Was this picture “particularly galling”? I can’t remember hearing any complaints (suggesting readers are biased towards MB spruiking falling prices, rather than the facts).

        I am not going to change the way I post because a few vocal commentors don’t like it. The weekly RP Data updates are widely read, suggesting the silent majority finds them useful.

        If you don’t like them, no one is forcing you to read them.

      • Dead-Money-Day


        I find macrobusiness’ infatuation with these rp data daily indexes quite bizarre

        No other data source gets the same level of publicity here

        Leith you say they’re widely read but by all accounts they’re not widely wanted, people read them because you publish them but if you published something better or more accurate they’d read that too and probably in greater numbers

        From what I’ve seen most of the comments under the rpdata updates speak negatively about it, questioning its accuracy and questioning why mb keeps on giving them airtime

        They dilute the quality of information here, is it all about the advertising dollar

        • FFS you guys are a pack of whingers. I would post the other price indices more often if they were released more frequently. Ditto the other real estate related data.

          RP Data and SQM are the only data providers that release info frequently. Hence, they get more air time. It’s as simple as that. If you don’t like it, don’t read it. Period.

      • I also agree – I understand that you might want to continue to post the daily index as it drives traffic, but at least have a disclaimer about reliability (not everyone has time to read everything else you post).

        Simply put – regular reporting infers credibility.

        To me, this is the antithesis of what Macrobusiness is all about, its quantity over quality.

        Personally Leith, I have found your property posts increasingly churnalistic, with less and less useful insight and analysis.

        Hope this isn’t too harsh an opinion, simply some feedback to think about.

  5. Lets be fair to Leith here. He doesn’t just publish the RP Data media releases. He publishes nearly all data reporter media releases (except BS Shrapnel..haha) including our own.

    And he has done well to publish this rather outspoken critique analysis of their daily index.

    RP Data do not have MB in their back pockets, unlike one other organisation that I know are on the teat.

    RP Data come out with what it seems to be at least two media releases each and every week. Their resourcing to do that is incredible. It is a clear strategy to be regarded as the dominant provider of real estate information.

    Media outlets will take up their releases because they need content. And besides, not everything they publish is crap.

    But I am relieved to know that when they do come out with rubbish, that it can be reported on and known.


  6. UE, does this dramatic lag in reporting mean that ALL measures of house price movements are unreliable until (say) six months after the period in question, when the results are finally in?

    Are there any sources/measures that DO contain (nearly) all the data within a month or two of sales occurring, without big gaps?

    Which data can I (more or less) trust?

    • Hard to say. The ABS’ index is probably the most reliable as it comes out last, hence it has more time to pick-up the latest results. However, it too is subject to significant revisions, especially in cities where titles office data lags (e.g. Melbourne).

      I tend to look at all of them – RP Data, ABS, APM, and Residex.

  7. anonysubscribe

    amazing that another emperor has no clothes. i think rp data boast that they are the leading index used by all stakeholders