Looking at the bigger picture

Each month we have a week where all the real estate housing stats come out telling us how the market is going. The past six days have seen three releases; firstly Barfoot & Thompson's numbers for the Auckland market, followed by QV’s, then lastly the Real Estate Institute’s.

It's fascinating to see the reaction to the numbers. As a general rule of thumb they are portrayed in a dark light.

Generally B&T and REINZ always try to put a positive spin on their numbers, while QV is straight down the line.

I wanted to take a bit of a bigger picture look at the numbers, and my conclusion is yes, the rate of growth is slowing, but it ain't all that bad.

Take QV's numbers. On a nationwide basis house price growth for the 12-month period to May was 2.4%. This compares with an annual growth rate of 4.9% for the 12 months to April.

Clearly the rate of growth has slowed.

How does that compare with other asset classes like bonds or shares?

Well, figures on the Good Returns website show that in the same 12 month period, the NZX50 was down 15.76%, the Australian All Ords index was up 2.79% and the MSCI, which measures international shares, was down 9.3%.

So property, compared to a growth asset like shares, looks OK.

Against income assets the picture isn't so good. The New Zealand government bond index was up 6.93%, while international bond indices were all up over 9%.

So overall the housing market still produced positive returns, but much less than previously. When you look into the numbers on a regional basis you see there are some wide variations. For instance some provincial centres, like Gisborne, New Plymouth and Palmerston North, went backwards and others showed good gains.

While there are stories in the media about individuals taking big hits on the sale of a property, these are one-off events.

If you look at how property has performed over the past five years, compared to other assets, then the picture isn't as bad as it gets portrayed.