Andy
Very interesting points. Unfortunately the QV numbers are a bit of a black box anyway. 3 month rolling average of 'values' rather than prices. QV tries to compare apple house sales prices with apple house values a year ago to work out the difference. This means the 6.8% number and the average sale price nationally of NZ$375,408 are not connected.
I think both REINZ and QV are flawed, but the best we've got in the end.
Very good point about the year on year comparisons.
cheers
Bernard

Fair point Andy but lets also remember all capital losses could have occurred in the 6 months directly after the yoy month comparison in question (or even less). In this scenario the following six months (the remainder of that year) would also indicate a drop of lets say 7% but prices may have actually stabalised in reality since the initial drop. So the illusion can work both ways but you are right - people need to look at the full picture (which includes peak prices) to get a good indication of where the market is going.

Two important points from today reports.

1. Average prices still falling at a time of the year when one would expect them to rise.
2. House prices are going to have to fall a hell of alot quicker than that to fall 30% from their peak.

When is the REINZ data due?

Usefully in this report QV do harken back to the fact that prices are now around where they were in March 2007, and I think they should be prevailed upon to use this comparison more than the year on year one

I given thought to this idea Andy and although it helps in this case its also flawed. Lets say for example April 07 prices decreased to about the same average as the prices for Feb 07 - so all gains made to March were subsequently lost in April. Lets say we have real time average price decrease for the month to Jan 09 of that same amount. One could correctly report that prices are now the same as Feb 07 - negative slant report indicating further price retreats for the housing market. Or one could also correctly report prices now the same as April 07 - positive slant showing prices recovering when the reality is they are not. This information could also be slanted in either direction if prices started to recover month to month. Agree?

The most useful illustration of this data is Bernard's little graph in the top left of this article. For the 3 years up to Oct 2007 prices rose with a pretty constant gradient and now they're dropping at just about the same rate. Note that whilst there was a 6.8% drop in both the year to October and the year to November, the total drop from October to November was ~7.4%. Just because the price is dropping at a steady rate doesn't mean its stopped dropping - thats just real estate "funny maths".

"2. House prices are going to have to fall a hell of alot quicker than that to fall 30% from their peak."

6.8% + approx. 4% inflation ~ 11% drop in real house prices according to QV (I believe REINZ figures - being shorter term averages - show it to be a bit more than this). So roughly 3 years for a 30% drop. The US housing funk has already been going for ~2.5 years so 3 years is hardly unrealistic....

Its worth noting that whether you're a real estate agent or a first home buyer, a rapid drop in prices followed by a return in volume over ~1 year would probably be preferable to the current proposition of a longer drawn out decline in value in association with very low volumes. Unfortunately liquidity and price transparency in the housing market tends to preclude the "down by the elevator" price movements seen in other asset markets. Which means jumpy 1st home buyers will keep sitting on their hands in the hope that next year they'll get a better deal than this year, and consequently limited business for estate agents.