Tuesday, April 7, 2009

House prices

Sorry about the absence - I've been helping my girlfriend move house for the last two days. Now, where were we?

I don't normally care what's written in the Weekend Herald. The Saturday edition generally makes the weekday paper look good, although neither of them really measure up to the sheer perfection of the Herald on Sunday. Anyway, the lead article in Saturday's paper screamed that the housing market was suddenly booming - "Auckland house sales soared 65pc in March, firm reports". The firm in question was none other than real estate firm Barfoot & Thompson, a company which definitely has no interest in the public thinking it's a great time to buy and sell houses. It's not a new thing in the Herald - ever since property prices started dropping, the Herald has been running puff pieces talking up the prospects for the real estate market.

In Saturday's piece, economist Gareth Morgan - seemingly the go-to guy for economic comment ever since his son made him rich by selling Trade Me, but also seemingly a reasonably onto-it person - said " the sales figures were not something to get excited about."
"It's a long haul this whole recession ... I don't see the data as significant in terms of signalling any turning point.
That would explain, then, why the Herald led with this story, with the numbers (increased numbers of house sales over last month and last year) in giant red letters on the front page. But the Herald does warn us not to get too excited:
[...] some economists are warning sellers and buyers not to get too excited yet.

In fact, every single person quoted in the article who is not in the real estate industry warns that the data are essentially meaningless in terms of long-term trends. To be fair, and as is reasonably common in the Herald, the headlines write cheques that the article can't cash. Although the real estate agents are obviously gagging to get on the front page and tell people to leap into the market, they're not completely unreasonable. According to the chief executive of Harcourts:
"We're judging the sales numbers against historically low levels. So while
they're better than they have been, it's not time for people to jump up and down
and say we're on the cusp of another wave.

Nonetheless, there is an element of "Fishmongers declare fish is delicious" in this 'story'. Quite why this article exists in the form and place it does is an interesting question. Essentially it's not much of a story, according to almost everyone involved; it's more of an ad for real estate agents. Why would the Herald run this as a lead? Well, according to the editorial in this week's Listener - like 90% of the print media in this country, an APN stablemate of the Herald - major newspapers are heavily reliant on real estate ads, like those in the Herald Homes supplement in Saturday's paper. The terrible state of the housing market, and thence the shrinking of the real estate advertising budget, has made things worse for newspapers in a time of crisis for print journalism. But I'll be damned if I have any sympathy for the people making these decisions.


  1. Damn, I lost a bet. I said you were dead.

    I've often thought that the randomness of Herald boom and bust stories on Auckland house prices was more related to which editor was involved in negotiations to buy or sell a property. I like the idea of the classified advertising (conspiracy?) theory though... it does actually make sense.

    I would also say that the Herald has been predicting a bust since 2005, so they were bound to be right at some point. Similarly, the prediction of a recovery must also come true... at some point.

  2. i think you only skipped writing the blog for a day in order to drop that unsubtle reference to a supposed 'girlfriend'. sure, sure.

  3. Is there any way to look at all HoS frontpages, going to back to 2005 or whenever it is they started, and see just how many refer to house prices? I suspect at least 90%!

    My biggest gripe about house price coverage is the blatant pandering and scaremongering depending on whether it's a buyer's or seller's market. It's shifted from "OH NOES! HOUSES INCREASINGLY UNAFFORDABLE!" to "OH NOES! HOMEOWNERS LOSING THOUSANDS AS PRICES PLUMMET!" and back again for years.

  4. If anyone *really* want to track the front pages of the Herald on Sunday, may I suggest the microfilm room at UoA library? Ah, many a happy afternoon spent there as a research assistant... Check out 'Whim Wham's New Zealand', lovingly culled from the pages of the Herald and the Press and typed by yours truly. Don't worry, I don't get a cut of the proceeds or anything...

  5. Wow, whaddya know! Four days after "Auckland house sales soared 65%", we get "House prices fall nearly 10%". Sigh.

  6. Nice to read this article and I enjoyed the way you have explained about house prices and how you mixes it up with your and your girl friends experience over here.