The devil is sometimes in the detail
27 Jul 2016
- making sense of the latest property market data
There has been much debate in the media again this week regarding the continued growth in the New Zealand property market – and in particular Auckland. With strong debate coming from a range of political arenas, analysts and media commentators, once again investors found themselves squarely in the spotlight and staring down the barrel of calls for potentially more lending restrictions.
But are investors really fueling the market as the commentary would have us believe? In our view, it all comes down to the data.
Data can be a very powerful tool in supporting evidence-based decision-making. But turning data into valuable and realistic insights can be as much an art as a science.
For example, if you take a median sale price vs an average sale price, the answer will be different. Similarly, if you remove the most expensive and least expensive properties - known as smoothing - the answer will be different again.
What we are seeing from our data is a very different picture to what has been carried in the media this week. There has been a strong return to the market by first home buyers and they are now the fastest growing sector in the Auckland market.
Since the Reserve bank’s lending restrictions were introduced on 1 November 2015, data indicates investors are largely buying in areas outside of Auckland – which is a key reason for strong regional growth in areas such as Hamilton and Tauranga, which are currently outperforming growth in Auckland.
The myvalocity team has spent a lot of time analysing the numbers this week to make sense of them for you. While 44% of residential sales last quarter were registered as being purchased by investors, this figure could potentially be misleading. If you then remove non-private owners such as Councils, Government organisations i.e. Housing NZ, retirement village units etc. and ensure transactions involving Mum and Dad investors are only included as single transactions, the net percentage of properties purchased by private investors drops significantly down to 24%.
So the devil really is in the detail and data reported as fact, without supporting evidence as to the measurement methodology, has the potential to be misleading.