November 25, 2012

Some houses are more expensive than others

From the Herald

It’s almost as good as claiming Lotto’s first-division prize – the winners in Auckland’s frantic housing market are selling their properties for hundreds of thousands of dollars above their official valuations.

Statistics show that in the past six months there have been at least nine properties that sold for $500,000 or more above their CV

My first instinct is to look up the number of houses listed for sale in Auckland over the past six months, and point out that this is about 0.025% of listings, so it compares to winning the lottery on more than one dimension.

But more importantly, the council valuation is almost completely irrelevant to whether the seller has done well out of the deal.  The seller doesn’t pay the council valuation to anyone. The costs to the seller (after taking inflation into account) are the purchase price, interest, maintenance, improvements, and rates,  and only the last is affected even slightly by the new council valuations.

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Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »

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