Will New Zealand residential property prices fall more, or rise less, than the UK, USA, Germany, Austria, Australia, and Canada in the data released in 2023?

Resolves YES is New Zealand residential property prices fall more, or rise less, in the BIS data than all of these other countries.

Resolves NO if data shows the opposite.

Resolves N/A if there are no new releases.

The prediction will be resolved using the Bank of International Settlements real residential property price indicators (indexed as Q2 2022=100), as in this FRED graph, based on the last period with data available for all included countries. (I expect we’ll get to 2023Q2 or maybe Q3 before the year’s end. There are sources released earlier and/or more frequently, but they won’t be used for resolution.)

Context: New Zealand’s housing affordability policy reforms.

Sort by:
woob avatar

Is this the mean, median or some other determinate (weighted by market?) of the other indexes?

yaboi69 avatar

@woob TL;DR: I’m not sure! I think they use more complicated tools – stuff like “hedonic regression adjusted median sale price in a post-stratified sample”, or a “sale price appraisal ratio method” (SPAR). In any case, the dataset is supposed to be used for cross-country comparisons.

It seems that BIS pulls these stats for most countries from their central banks or governmental statistical agencies. There appears to be at least nominal cooperation between BIS, EU, OECD, IMF, WB, etc., in developing and harmonizing methods. While it’s not all that clear how well this is actually coordinated in practice, BIS states these indices are specifically derived “to facilitate cross-country analysis”.

New Zealand has some peculiarities – a private company, QV, provides these statistics both to the national govt and intl bodies, and it relies on the SPAR method, among only a couple of other countries. From my naive skim, it’s definitely not a “cancel the market” level problem, but feedback is welcome. The original QV index is available in real-time on their website (https://www.qv.co.nz/price-index/) – it’s one of the sources that get out much earlier and more frequently than the BIS releases. If it’s the exact same thing, just published faster and requiring minor data wrangling (indexing, quarterly format), it could inform traders in advance. I may tinker around and read up on it more. Hmm.

What I quickly CTRL+F searched through and skimmed, starting out by googling around and clicking from https://www.bis.org/statistics/pp.htm:

woob avatar

@yaboi69 sorry I should have been more clear, you reference multiple indexes in comparison to NZ, but then you say "above or below", but you don't clarify how you're reducing 6 indexes to a single number you can make a definitive comparison to, there are situations where you could actively select median, mean, all, none, or weighted to always win your side (if you're a malicious actor), so in the name of transparency, you should be clear about how you will reduce the 6 indexes down to a single number that can be compared against NZ's index.

yaboi69 avatar

@woob The intended method is to make simple direct pairwise comparisons. NZ has to beat each of the other listed countries – not their mean, median, etc., but all of them individually. (In the most recent period where values for all are simultaneously available.) Compared variable: change of prices since 2022Q2.

Visually, using that FRED link, the NZ line has to end up lower than other lines.

Sorry for the confusion, hope some of this wording is less ambiguous. I’ll sleep on it and clear up the description, tomorrow or so.

chrisjbillington avatar
Chris Billington
bought Ṁ5 of YES

I think this is going to depend more on interest rates than the reforms. NZ's central bank rate is apparently expected to peak at 5.5%, Canada's to peak at 4.5% and decline this year, Australia's to peak at 3.6%, the US to peak at 4.75-5%. Don't know about Germany and Australia but would default to expecting rate cuts due to inflation there being more supply-side. The UK isn't expected to go as high as 5.5%: https://manifold.markets/Heaffey/will-the-bank-of-england-base-rate

(strictly speaking one should be looking at the amount by which interest rates were hiked, not just the final rate, but I can't be bothered and most started more-or-less at zero)

So it looks like the effect of interest rates in NZ will be larger than elsewhere. However, that's a lot of other countries, and it only takes one where property falls more than in NZ.

The trend in population compared to new construction matters too. I've read that NZ's new dwelling construction is at record highs despite interest rate hikes (this being credited to the reforms), whereas I believe construction is more subdued elsewhere. This will push prices lower than otherwise. On the other hand, German population growth for example is stagnant, making it easier for construction to keep up with population growth and pushing prices down.

Off-topic gripe about incentives on Manifold: I wish I could see more people discussing their reasoning in the comments, but this is disincentivised because it reduces how much mana someone can make off a mispriced market. I don't have a strong view on this market, just thought I'd lay out some thoughts. Otherwise I'd probably keep quiet!

yaboi69 avatar

@chrisjbillington Much appreciate the reasoning