Olly Newland’s Column, November 2010
A FEW DAYS AGO Quotable Value (QV) came out with its monthly report and the headlines that followed were totally predictable:
“Property prices sliding” or “House values slip again” etc.
What a lot of rot.
Government-owned valuer Quotable Value (QV) has reported house values continued falling in October and are now down 1.6% from March.
QV said prices rose 2.8% between October 2009 and March 2010, but have since fallen. However, they remain 1.1% above October a year ago.
“The low level of sales activity we have seen all year continued through October, with sales well below both last year and the long term average,” said QV.co.nz Research Director, Jonno Ingerson.
“There is no sign of the traditional spring surge in sales, and we don’t expect any significant increase in sales before the New Year,” he said. Full QV stats and commentary here.
If you read that carefully, the part that really matters is buried three 3 lines down, and that is that prices are actually 1.1.% higher than they were a year ago.
The error made by many is to look at monthly sales figures and grab the the most catchy headline … never mind the facts.
When analysing big ticket items such as house prices (which react very slowly one way or the other) it is the annual trend that must be watched, not the the day-to-day or monthly statistical wobbles. Look at this:
Monthly housing index chart here from interest.co.nz.
So looking back over the last twelve months we see that prices were steady with a UPWARD bias. (If anything.)
Exacerbating the whole matter is the fact that sales volumes are at a very low level. As prices are still staying relatively firm it proves what I have always known that 95% or people might want to sell or buy do not have to buy or sell … so they stay put instead.
So we have no stampede of property onto the market, and forced sales remain mainly in the poorer areas where investors got tucked into buying slums by the now defunct “gee whiz” spruikers who pushed them into them.
So much for the doomsayers who predicted a 30% crash in property prices, together with the collapse of civilisation as we know it. (Sorry to keep bringing it up, boys.)
It hasn’t happened. And it won’t happen, for several irrefutable reasons: