A revamp of the housing market data announced today is great news for property investors and is long-overdue.
One of the big concerns I have about reporting on house price movements is that most commentators think of, or report the market as being one big mass. This implies the market is the same.
The reality is far different. The housing market is an extremely complex beast with lots of different sub-markets or sections.
The Reserve Bank today released a document on how it would like to see the market reported. The ideas are good, and hopefully the index will be better than the name they gave it: “Development of stratified housing price measures.”
What they do is talk about different levels, or strata, in the market, based around price bands.
This will be useful to understand what is happening in the markets property investors are interested in.
We know house prices and rents are of intense interest to investors and something they watch often.
A comment in the bank’s document highlights part of the reason for this.
It notes that "sales volumes on cheaper property is more cyclical." It’s understanding these cycles which is so important. (As an aside, the guru of property cycles, Kieran Trass, has just released a new book on the subject. The Housing Bubble is well worth a read if you want to learn more about how the market works).
The other point worth making about the market is that it can be cut up many other ways than just by price. You can look at it from a metropolitan/provincial point-of-view, by types such as apartments, three-bedroom homes, flats and so on.
The more information there is out there telling investors what is happening in the market, the better.
My hope is that once this series is established we will see much more informed house price commentary.
A revamp of the housing market data announced today is great news for property investors and is long-overdue.
