Damn lies and Statistics
SQM Research’ Louis Christopher – one of the few straight shooters in the real estate statistics game – has just issued this broadside in the SQM Research Newsletter. And he is right. We quote it in its entirety:
SQM Research Newsletter dated 26 July 2011
Some words from our Managing Director- Louis Christopher:
As mentioned in our newsletter last week, on Sunday July 17th, Chris Vedelago, a real estate journalist from The Age reported on the Real Estate Institute of Victoria’s (REIV) very questionable auction clearance rates, which are widely published and quoted each week by major media outlets.
Click on the link below to read the story.
Auction statistics questioned
This story will give you some insight into the state of real estate statistics in this country and in particular auction clearance rates in Victoria. I want to make it very clear that we stand behind every quote and every allegation made that the Melbourne auction clearance rates that are currently being published by the REIV are inaccurate and misleading. These clearance rates are providing a deceptive representation that auctions are a successful way for vendors to sell real estate. The reality is they are not nearly as successful as what is purported.
This story though has quite a bit of history to it. As we provided for you last week – the following is also a link to a story written in 2006 by Crikey, which will give you some real insight in terms of the forces that have been at play for some time.
These points below, covering the REIV’s auction reporting at the time were found by yours truly and the company – Australian Property Monitors, which I was running back at that time:
* A large number of properties going to auction with their result not being reported
* Privacy treaty sales being published as auctioned sold
*Auction sold results republished weeks after the event
*Commercial properties sold under auction being published as though they were residential properties
These points of fact with evidence were sent to certain senior executives employed by The Age at the time (2006). This was done with the blessing of Fairfax Digital, which acquired Australian Property Monitors (APM) in 2006.
Unfortunately, those senior executives chose to ignore the evidence APM gave them. I believe the reason why they did this was for the protection of The Age’s real estate advertising revenues – by ensuring certain organisations (such as the REIV) that could threaten those revenues by wielding their influence over real estate agents, were kept on the side. But that’s just my insider’s opinion.
Coming back to the present day, we find that the primary reason why the clearance rates are higher than what is actually occurring is due to the level of unreported auctions taking place. Unfortunately, we at SQM Research are not quite big enough to send our independent monitors to auctions, the same way APM was able to in 2006, which may or may not shed light in terms of whether the other problem with reporting found back then is still happening now. But of course it is easy to pick up on the level of unreported activity, just as The Age has verified, by going out on the ground themselves in recent weeks. And that alone is enough to significantly distort the auction clearance rate reported by the REIV.
Now the question is, why is it that The Age is now allowing these things to be openly reported?
Well, I am not sure, other than I suspect that the REIV, through its portal realestateview.com and other mastheads they are getting involved with are increasingly seen as being on an opposing team to The Age. Importantly though, it should be noted that Chris Vedelago was never involved in this history. Chris is thankfully doing his job and I also know that Chris is seriously and personally interested in exposing these serious issues surrounding auction reporting. I’d say this is also the case with his editor and perhaps that is all there is to it. And whatever the motives may be right now, The Age should be commended for bringing this to the attention of the wider public.
Now, going back to the issue of auction reporting in present times, I see that Enzo Raimondo and indeed the premier of Victoria, who has a strong background in real estate have raised the privacy issue. In other words, nondisclosure of real estate pricing is a right of the vendor due to privacy.
This must be the most devious reason given for not forcibly retrieving results from the industry.
You see, auctions are a public event. That means that what has transpired at the auction is entirely open for the whole world to see. Not just those who attended the auction.
And what is not widely known is that the details of all property sales are eventually available to the public via the land titles office. Oh, of course, with the EXCEPTION of Victoria where these results are ONLY available to real estate agents. What a ‘convenient’ little fix that is. It means, unlike any other state and territory in Australia where the public can go down to the their land titles office or buy a sales report from one of the data houses, Victorians can’t get readily accessible real estate data- only Victorian real estate agents can. This is all because by doing this “institutes” like the REIV and The State can make as much money as possible and control as much as possible, including news on the health of the market. This has nothing to do with privacy and EVERYTHING to do with financial control of information.
What a sad, sad situation.
The public are ENTITLED to all market pricing information including sales prices. To not provide them with this information enables crooks to deceive both buyers and sellers on what is considered fair market value for a property. Unfortunately what Enzo Raimondo and his “institute” seem not to be able to comprehend is that if we have a transparent housing market with reliable information that is easily available to the public, that will actually BREED confidence into the market. Both buyers and sellers will be more active in the market because transparent un-manipulated information is good for the whole industry. As opposed to now where hardly anyone knows what is going on in Victoria, opening up the channels for those with ulterior motives to take complete advantage of the information black out.
I suspect that is what this battle that Chris wrote about last week is all about.
The battle is for information- who controls it and at what price.
Sadly, for the Victorian public and indeed real estate agents, the battle has been all but won by the REIV and it this has been the case for a while now.
Stay tuned for next week where we will discuss the potential boycott of realestate.com.au and how this fits into this equation. Is this just a ploy by Enzo to control even more information for financial gain, or do agents have a legitimate concern about what realestate.com.au has been doing? Is this a dangerous situation for individual buyers and sellers who are seeking independent information? ENDS ENDS ENDS
(David Collyer here)
Them’s fighting words! And Prosper allies itself to the forces of truth and transparency. The market for land is the single most important market in the country, valued at over $4 trillion. it dwarfs the stock exchange, where one can track every transaction to the minute.
Who benefits from misleading statistics? Not buyers! Not sellers! Not the media!
The Que Bono? test shows the real beneficiaries are REAL ESTATE AGENTS. Not content with collecting fat commissions in trading capital goods, they have also aggrandized to themselves the control of information. Human nature dictates this control be used to further their private interests. Abuses of information for personal gain on the Australian Stock Exchange is a CRIMINAL ACT THAT SEES OFFENDERS JAILED. Not so in real estate where lies and puff are stock in trade for agents.
Caveat Emptor! Buyer Beware!