"It's a serious issue because property investors base their decisions on the assumption that what they read is accurate."
Housing price data 101: Why the misrepresentation and misunderstanding of pollies and journos is hurting consumers
I'm unsure which is the greater crime: dishonesty or incompetence.
The question arises in my mind almost daily as I observe the work of journalists and the outpourings of politicians.
Both are guilty of misuse and abuse of statistics to achieve their respective objectives, which have in common the goal of easy headlines.
The victims are consumers. Real estate consumers are perhaps the ones who suffer the most. People tune into media to become gather knowledge but often come out the other side of the process with their heads full of misinformation.
Whenever I speak at conferences and seminars, most questions from the floor are based on misinformation. Questioners usually have no idea the knowledge they think they have is tainted.
It's a serious issue because property investors base their decisions on the assumption that what they read is accurate. They entitled to do so, but at the same they're fools if they do. Hundreds of thousands of dollars are at stake.
Both politicians and journalists misuse statistics in equal measure.
Last year I had a major stoush with a senior federal politician who misused real estate statistics in the most outrageous way to score political points. I wrote a newspaper column that showed his conclusions were wrong and argued he should have known better. No one with half a brain would chart monthly median price movements in towns that average one or two sales per month.
He demanded apologies and threatened legal action. I put a considerable amount of time into proving he was categorically wrong.
Amid the protracted tussle, I was unable to determine whether the politician had deliberately mangled the statistics or whether he didn't understand the vagaries of median house prices.
He was either dishonest or he was incompetent. Either way, he was unfit to be a senior member of a major political party.
The same argument applies to journalists, who through lack of expertise or a lack of ethics place erroneous interpretations on real estate statistics.
Every scrap of data is given unwarranted significance. Screeds of newspaper space is devoted to commentary on monthly changes in median prices, written by people who don't understand how median prices work and are apparently unaware that they are misinforming consumers about property "values".
The latest monthly data on housing loans has been given an optimistic spin by some and an unreasonably negative emphasis by others, all of them guilty of over-doing the import of the figures. Monthly movements are largely irrelevant – only the long- term trend matters.
The ABS has been at pains to inform journalists that too much emphasis should not be placed on monthly changes in the jobs data, as it is a survey only and has a broad margin of error. But the latest figures were reported without any regard for the ABS warning. "Economy sheds 27,000 jobs", shouted one inaccurate headline in a metropolitan newspaper.
Are they ignorant or do they simply not care about accuracy? I suspect sometimes it's both.Terry Ryder is the founder of hotspotting.com.au and can be followed on Twitter.