Leith van Onselen, a back-office executive in financial services, has tried to criticise Rismark's dwelling price-to-income ratio by consistently misrepresenting what we publish. For a long time he claimed Rismark compares 'median' house prices to 'average' incomes. This was wrong, which he now reluctantly acknowledges: Rismark compares 'average' prices to 'average' incomes. He now mysteriously claims that Rismark switched to the average vs. average comparison at some point in 2010. Well, as at March 2010, we were publishing the average vs. average ratio, as you can see in this post here.
Another misrepresentation was that Rismark does not strip out 'non-cash' items from the ABS's measures of disposable household incomes. This, again, was wrong, which van Onselen now admits. We do, in fact, supply an estimate of the impact this has on the ratio, which is trivial in the scheme of things. Excluding owner-occupied rents increases our preferred price-to-income ratio by 9% from 4.5x to 4.9x using the latest ABS National Accounts data.
Today, van Onselen claims that Rismark still focuses on a median price-to-average income comparison and shows a chart that he purports we created for Switzer to back up this claim. The problem is that this chart is not from Rismark, but rather from HSBC, who decided to focus on the median-to-average ratio, rather than our preferred average-to-average benchmark. (We were quoting from an HSBC report that contained this analysis.)
van Onselen now questions why we don't exclude superannuation contributions from the ABS's National Accounts measure of disposable household incomes. A simple answer: retiree households can access these superannuation contributions (ie, it is a cash item for them), and thus draw on it to assist both themselves buying new homes, and/or their children with their property purchases. In addition, direct residential property is one of the most common assets found in self-managed superannuation funds.
van Onselen asks a final question: why doesn't Rismark use the disposable household income data from the ABS Household Income and Income Distribution Survey, which was last published in 2007-08? Answer: because it is 2011 not 2007/08, and the ABS kindly publishes a much more timely, quarterly estimate of average Australian disposable household incomes in the National Accounts, which is what Rismark relies on. Some folks seem so emotively committed to willing a crash in housing values that they will do anything to continue justifying their view of the world even after being proven relentlessly wrong.
