COMMENT: In 1924 New York Publishing House Albert Bigelow Paine published the autobiography of famous author Samuel Clements (better known to us as Mark Twain) in which Clements quotes the phrase “There are Lies, Damned Lies, and Statistics”. Clements / Twain attributes the quote to former British Prime Minister Benjamin Disraeli – precisely why, we don’t know, because no reference to the quote has ever been found in any of Disraeli’s published works and letters – and there was no way to find out because Clements had died 14 years before his autobiography was published.
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However, despite this confusion of authorship, the phrase has stood the test of time and is now commonly quoted by those who want to cast doubt upon the veracity of data – often with good cause. This isn’t to suggest that using data to make a point is a bad thing – indeed, much of what I write is backed up by historical stats which I use to build my case. But while the numbers themselves don’t lie; they can certainly be misrepresented – sometimes with disastrous consequences.
At its simplest, misrepresentation of information takes place in conversations between friends, family and colleagues - but it doesn’t stop there. Misuse or manipulation of statistics and numbers to make one’s point is a common occurrence in politics and business.
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In the housing market, as in other walks of life, this can result in people making bad decisions. The ill-fated Kiwibuild policy was based on a claim, back in 2012, that we urgently needed 100,000 more homes. The source of that claim is now lost to the mists of time, but its consequences mean that we’ve lost over a decade in which we could have been doing something meaningful for first home buyers. Bad policy based on bad data.
Sadly, this isn't the only example. It seems to me that the arguments leading up to the foreign buyer ban were in large part fuelled by research that cited homeowners with Chinese-sounding names and that the Bright Line Test is the result of a misunderstanding of what a speculator is.
A few weeks ago, Housing Minister Megan Woods told Parliament that based on a range of estimates by banks and property experts, including myself, she had been advised that the gap between housing supply and demand was anywhere between 28,000 and 200,000 homes.
In my case, this was actually the exact opposite of what I really said, which is that the housing shortage is a myth and that we’ve oversupplied the market by around 200,000 homes over the past 35 years.
It’s not always the politicians who can get things wrong. Sometimes a seemingly harmless headline can skew our view of the market in a way which severely misrepresents what the data actually says.
In May of 2019 we were confronted with at least one headline screaming “Foreign house sales drop 80%” in response to the news that homes sales to foreigners had dropped by 81% as a result of the Government's introduction of a foreign buyer ban a year earlier. What wasn’t clear from the headline was that the 81% drop was actually 81% of the just 3% of Kiwi houses that were actually being sold to foreigners prior to the ban - a far far smaller number than that implied by the headline.
Property information can have power, but used unwisely, that power can be devastating.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at ashley@nzemail.com
