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(声明：转载本文只诣在传达一种声音供大家讨论，并非代表我个人观点。我个人对一切信息均采取观望态度，也希望大家谨慎接受各方面信息) Why we don’t understand house prices by Christopher Joye Posted 29 Dec 2008 3:24 PM Few subjects elicit more emotive debate than house prices. And rightly so given that the average Australian family has 60-70 percent of all their wealth in the world invested in their home. Understanding whether house prices are moving up, down or sideways is of vital importance to us all. Yet as the co-producer of one of Australia’s most well-referenced house price indices, I have been amazed at the number of times individuals have expressed disbelief at the remarkable resilience displayed by the median Australian house price during the last 12 months. Despite households being slammed with five-plus interest rate hikes between November 2007 and mid 2008, plummeting consumer and business confidence, a non-farm economy that registered negative growth in the third quarter, daily doom and gloom regarding the global financial crisis, and unprecedented 50 percent across-the-board falls in shares and listed property trusts, Australian house prices have barely budged. In the year to end October 2008 they are off by about one per cent notwithstanding hyperbolic predictions from several commentators of 30-50 per cent price falls. In fact, the latest data indicates that Australian house prices have stabilised in the fourth quarter. And yet if you believed the headlines and the statements of various pundits you would think the world was coming to an end. The media has incessantly recycled war stories from affluent areas -- such as Sydney’s northern and eastern suburbs -- about precipitous price discounting, cataclysmic losses on multi-million dollar homes, and vast swathes of properties listed for sale in salubrious destinations like Palm Beach. As economists like Macquarie Bank’s Rory Robertson have noted, the quality of reporting in general has, however, been very poor. For example, under the headline “Dismal Outlook for Housing” The Australian Financial Review exclaimed on 16 December 2008 that “median house values had fallen since September”. But this is just plain wrong: according to the two key house price indices published by the Reserve Bank of Australia--APM and RP Data-Rismark--median Australian house values have actually risen since September. More generally, conversations amongst the commentariat and members of the financial services industry in particular are littered with bearish stories of house prices plummeting in luxury markets and vendors not getting the gains they expected (which is equated with a real loss). But what these folks don’t understand is that price movements in the $1 million plus sector are of virtually no relevance to the average Australian home owner or the overall housing market. The truth is that an important behavioural bias, known as ‘anchoring’, is responsible for the inability of many journalists (and the financial services executives to whom they speak) to fathom Australia’s housing market dynamics. Anchoring denotes the tendency of people to rely far too heavily on small pieces of non-representative information when making decisions or estimating probabilities. In 2002 Daniel Kahneman was awarded the Nobel Prize in Economics for his work (with the late Amos Tversky) documenting the anchoring bias and other behavioural dispositions that adversely afflict human decision-making. These frailties in our judgment have been shown to exacerbate the protracted booms and busts in share prices that we have observed over the last 30 years. When it comes to house prices, purported experts tend to make the mistake of extrapolating out from their individual circumstances and using this information as a credible proxy for the wider market. Yet despite the media prominence given to homes worth more than the magical $1 million mark, these properties account for only 5 per cent of all sales in Australia. That is, they are of no relevance to 95 percent of home owners. In fact, nearly 80 percent of all Australian property sales in the last year have comprised of homes valued between $200,000 and $600,000. Importantly, there has also been a great disconnect between the performance of properties in the luxury and mass markets. The global financial crisis has hit middle to upper income households in the financial services sector hardest. So-called ‘affluent unemployment’ has triggered substantial property price falls in dress-circle locations such as the eastern and northern suburbs of Sydney and the Tooraks of Melbourne. And thus the top 10 per cent of all homes in Sydney and Melbourne ranked by value have suffered the highest price falls, declining by more than 12 per cent over 2008. Yet the median Australian home, worth just over $400,000, has been extraordinarily resilient falling by little more than one per cent. It is, therefore, highly misleading to presume that the experience of upper income households can be applied to the average Australian home owner as is the media’s want. While rising unemployment will inevitably put further pressure on prices, this will be counterbalanced by 30-50 per cent reductions in mortgage rates combined with the government’s commitment to support households via greater fiscal stimulus. Australia’s media also needs to come to the party by spending less time fuelling consumer fears with sensationalist headlines and investing more effort objectively analysing the data. The $3.3 trillion housing market is simply too big a topic to get wrong. |
