Posted to The Age (13/12/2011) on 15/12/2011 at 4:55 AM
Commenting on "Where is the housing market headed?"
http://theage.domain.com.au/blogs/talking-property/where-is-the-housing-market-headed-20111213-1osf0.html
Statistics is NOT an exact science, and therefore must be interpreted alongside with other available relevant information. The published result may contain different levels of "noise" and can only be used as a guide and not by its face-value.
It may sound fantastic if a suburb has a clearance rate of 100%. How useful is this information if there was only one property auctioned that weekend? The data sample is too small and the clearance rate is deemed statistically unreliable.
An increase in median price at first glance may indicate most if not all the properties during the reporting period have gone up in value. However, closer scrutiny may reveal something totally different. If time is getting tough with property values declined, even many wealthy property owners have to sell their properties at reduced prices. With more high-value properties entering the market for sale will definitely distort the median price as well as the average price. Both prices may simultaneously increase, but that does not provide a true picture of the declining real estate market.
What will you do if data on numbers of properties sold, passed in, and clearance rate are unavailable like a decade ago? Do you feel naked real estate-wise? It is important for readers not to dwell on the accuracy of the available data from just one source, but learn to cross check with other statistics and the local agents.
Commenting on "Where is the housing market headed?"
http://theage.domain.com.au/blogs/talking-property/where-is-the-housing-market-headed-20111213-1osf0.html
Statistics is NOT an exact science, and therefore must be interpreted alongside with other available relevant information. The published result may contain different levels of "noise" and can only be used as a guide and not by its face-value.
It may sound fantastic if a suburb has a clearance rate of 100%. How useful is this information if there was only one property auctioned that weekend? The data sample is too small and the clearance rate is deemed statistically unreliable.
An increase in median price at first glance may indicate most if not all the properties during the reporting period have gone up in value. However, closer scrutiny may reveal something totally different. If time is getting tough with property values declined, even many wealthy property owners have to sell their properties at reduced prices. With more high-value properties entering the market for sale will definitely distort the median price as well as the average price. Both prices may simultaneously increase, but that does not provide a true picture of the declining real estate market.
What will you do if data on numbers of properties sold, passed in, and clearance rate are unavailable like a decade ago? Do you feel naked real estate-wise? It is important for readers not to dwell on the accuracy of the available data from just one source, but learn to cross check with other statistics and the local agents.
