Being precise

There are stories in the Herald about home buyers being forced out of Auckland by house prices, and about the proportion of homes in other regions being sold to Aucklanders.  As we all know, Auckland house prices are a serious problem and might be hard to fix even if there weren’t motivations for so many people to oppose any solution.  I still think it’s useful to be cautious about the relevance of the numbers.

We don’t learn from the story how CoreLogic works out which home buyers in other regions are JAFAs — we should, but we don’t. My understanding is that they match names in the LINZ title registry.  That means the 19.5% of Auckland buyers in Tauranga last quarter is made up of three groups

1. Auckland home owners moving to Tauranga
2. Auckland home owners buying investment property in Tauranga
3. Homeowners in Tauranga who have the same name as a homeowner in Auckland.

Only the first group is really relevant to the affordability story.  In fact, it’s worse than that. Some of the first group will be moving to Tauranga just because it’s a nice place to live (or so I’m told).  Conversely, as the story says, a lot of the people who are relevant to the affordability problem won’t be included precisely because they couldn’t afford a home in Auckland.

For data from recent years the problem could have been reduced a lot by some calibration to ground truth: contact people living at a random sample of the properties and find out if they had moved from Auckland and why.  You might even be able to find out from renters if their landlord was from Auckland, though that would be less reliable if a property management company had been involved.  You could do the same thing with a sample of homes owned by people without Auckland-sounding names to get information in the other direction.  With calibration, the complete name-linkage data could be very powerful, but on its own it will be pretty approximate.