The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Sunday, July 15, 2012

Median Melbourne house prices rise during June quarter

One or two non-economics (or non-technical) media commentators had questioned RP Data-Rismark's daily index findings that dwelling values across many of Australia's capital cities started rising again following the three (standard) rate cuts the RBA implemented in May and June.

This included an online news journalist for the SMH, Chris Zappone, and the TV morning show host, David Koch. There was no empirical basis for their scepticism (ie, they did not reference any other index data), just the claim that the notion of house price increases was hard to believe. Zappone and Koch are well known for being bearish on the housing market generally, so this negativity was not surprising in and of itself.

The good news is that we now have a completely independent set of median price data from the Real Estate Institute of Victoria (REIV). According to the REIV, median prices across Victoria actually rose 3.8% in the June quarter. They increased by a similarly impressive 2.9% in the city of Melbourne (see the table below). We also have access to daily data from RP Data-Rismark, which shows that the capital growth that commenced in June in Melbourne has continued over July.

As is often the case, the REIV median price results are much more volatile (or imprecise) on a quarterly basis than RP Data-Rismark's hedonic index, which uses a sophisticated statistical regression technology to ensure that it measures the actual change in dwelling values rather than noise generated by compositional adjustments in the types of homes that are selling. It will be fascinating to see how these two journalists report the REIV's results, if indeed at all.