Be careful who you listen to
Friday, April 17th 2009, 11:21AM 
8 Comments
Making sense of what is happening to house prices has to be one of the most difficult things for home owners and investors to do.
Firstly there is a wealth of data, mainly from QV and the Real Estate Institute (REINZ), which you can use to interpret yourself. This is raw data on sales which you can use to draw your own views. We collect the REINZ data and provide some tools to track and compare what is happening here.
Over the top of that there are numerous commentators, some expert and some not.
A couple of pieces of news this week caught my attention and are helpful in understanding these two groups of information.
The first is a piece by Alistair Helm which compares and comments on the differences between QV and REINZ data. Each organisation collects and reports things differently and often they can seem to tell differing stories.
The second piece comes from BNZ chief economist Tony Alexander who summed up well in this week’s newsletter, his thoughts on some of the “commentators” who end up in the media and why they seem to have gone quiet. The key reason they have gone quiet is because the market isn’t tanking, but showing signs of recovery.
I have included some of Alexander’s views here as they are important:
“One doesn’t hear so much now from those who have been picking a 40% fall in NZ house prices. It has always been a mystery to us how one could generate such apocalyptic forecasts.
“In the case of one mild profile individual, one could simply put it down to a lack of experience and qualifications in the field of economics and a desire to say something controversial to make money from people clicking on a website.
“For another individual the reason is probably that they have been predicting a property market collapse since at least 1988 when one first heard them speak.”
I agree with Alexander and suggest that people need to understand a bit about people who are making forecasts, what their experience is, but more importantly, what their motivation for commenting is too.
One can argue bank economists are always saying things to please their masters and help drum up business.
My experience is that bank economists give fair and frank assessments. They aren’t out there saying things just to help drum up business and they aren’t just glorified PR merchants.
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Comments from our readers
On 18 April 2009 at 6:53 am Peter said:
My guess is that Tony Alexander is referring to comments from Bernard Hickey in relation to one mild profile individual and Gareth Morgan in relation to predicting a market collapse since 1988. Lets name these individuals who seek the limelight of the media for their own purposes and let them defend their statements. On 18 April 2009 at 3:40 pm Scott said:
I agree with Peter, I am now very dubious about anything Bernard Hickey or Gareth Morgan have to say. When will these two actually be held accountable for some of their very bold statements? I have been following Tony Alexandra's commentaries since the late nineties and have found him to be consistantly reliable with his predictions. On 19 April 2009 at 1:37 pm Peter II said:
To the list of Bernard Hickey and Gareth Morgan needs to be added the name of Mary Holm. She regularly writes articles in the paper professing to be an expert on financial investing and property. Basically she (and all other financial "advisors")hates property because they make no commission on people doing their own investing through property rather than paying very expensive fees (visible and often invisible)to them. On 20 April 2009 at 11:10 am John said:
In defence of Mary Holm - I'm a keen follower of her column in the Herald, and find her views sensible. I don't think she's anti-property, she just isn't one of the many who think property is the be-all-and-end-all of investing.
On the topic of whether she's an expert - her website www.maryholm.com indicates that she's an author, lecturer, and seminar presenter, but not that she's a financial adviser, so I assume the accusation about commissions is unfounded. She's also a member of the Capital Markets Development Taskforce, meaning her expertise is pretty widely recognised.
On 20 April 2009 at 2:18 pm Ted Grenfell said:
We're investors ourselves and only in rental property. No shares or anything else. Have also been reading Mary's columns for some time now and respect her views. We don't neccessarily agree with them all but we've not come away with the impression that she's commenting with any particular bias.
Never listened to the other unnamed parties. Is obvious they've a vested interest in what they're saying and I rely instead more on bank commentary, the advise of our mortgage broker and our accountant.
On 2 May 2009 at 5:54 pm Hamish said:
Don't forget nobody, even somebody who is well educated, can look into the future. On 11 May 2009 at 6:54 pm Nick said:
Hmmm....interesting comments hope you are all reading the doom merchants over at www.interest.co.nz. Would agree that a flatten is occurring and arguably there is activity in certain price/area but am being offered a lot of "soon to be mortgagee" mostly from business failure.....anyone else getting this and are we heading into the winter of discontent? Commenting is closed
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Not wishing to partake in self-promotion; I would just like to share the insight we are endeavouring to bring to the market in the form of the new monthly report we are producing from statistics from the website which indicate the health of the market as measured by the inventory of new listings coming onto the market and the asking price expectations of those sellers.
The first report (NZ Property Report) was published on the 1st April and provides a historical perspective covering the past 2 years back to Jan 2007. Future months reports will be published on the first of every month.