Statistics – How They Can Be twisted

 

The news media appear to be in some sort of deliberate frenzy to prove, disprove or confuse the public on how the new LVR  restrictions will affect the housing market.

 

It also goes to show how statistics created by the pollsters can be made to show whatever the media wants in order to get another headline.

 

In today’s Herald there is another “shock-horror”story about how the new LVR restrictions are affecting the market together with a  “poll” to back the story that most NZ’rs want house prices to come down. Well everyone wants prices to come down, or at least level off and not become a dangerous bubble. It is also note worthy that school holidays have just started. As everyone knows, the property market slows right down over the holidays as frazzled parents try desperately to keep children amused- house hunting being low down on the list for little ones.

 

Then by contrast we have a tvone story on the same subject only a few days earlier, which also ran a “poll” which showed that a large majority of people opposed the new LVR restrictions.

Same subject, different questions, opposing results.

 

In my view the market will hesitate a few weeks, and then as the non bank lenders, and second mortgage suppliers get into gear, and the school holidays thankfully are over, it will be back to business as usual, but with one difference:  higher rents as those first home buyers who do miss out, are forced to  rent even longer then ever..

 

By the way, not all first home buyers  are “young couples starting off on the journey of life”. There are just as many people who are not first home buyers, and don’t have the necessary 20% deposit to buy  a home. People who have broken relationships, the widowed, the ill, and those who have had financial bad luck. It looks like the queue is going to be much longer than many people think.

 

I would have thought a simpler plan to gently curb excessive prices would have been to have a different level of interest rates for home owners and investors. Nothing dramatic, maybe a  1% to  1.5% higher rate  for investment homes as compared to owner occupier  homes.  That would definitely slow down excessive expenditure by the over zealous. It would also feed into rents but rents have been stagnant too long in any event so there is room for movement there.

 

Is seems a pity that those in their ivory towers, who dream up these ideas, never seem to talk to those of us on the ground to obtain pragmatic solutions. You never know. They may get some more practical ideas.

 

One way or the other the end result is inevitably unintended consequences and market distortions. Seems a pity.

Mortgage rules start to bite
By Alanah Eriksen
Monday Sep 30, 2013

On the eve of new mortgage lending restrictions coming into effect, there are signs the first-home-buyer market has gone off the boil.

Open homes in the sub-$500,000 price range in Auckland were unusually quiet over the weekend, apparently because buyers knew they would be unable to close a deal before the new Reserve Bank rules take effect tomorrow.

The change limits the number of home loans banks can make on purchases with a loan-to-value ratio greater than 80 per cent – meaning most would-be owners need to have a 20 per cent deposit.

The apparent cooling of the market comes as a Herald-DigiPoll survey reveals almost 60 per cent of New Zealanders think house prices should come down to help first-home buyers.

Read the rest here:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11132061

 

Majority of voters oppose new loan restrictions – poll
Tuesday September 24, 2013
tvone news

The majority of voters are opposed to new loan restrictions that will require home buyers to have a 20% deposit when applying for a mortgage.

According to the latest ONE News Colmar Brunton poll, 57% of eligible respondents said they did not support the policy.

In contrast, 38% of respondents said they did support the new restriction and 5% said they did not know.

Read the rest here:

http://tvnz.co.nz/national-news/majority-voters-oppose-new-loan-restrictions-poll-5589650

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