Transcript

Instructor 00:00

Section 3, following instructions from their tutor, you will hear two economic students called James and Anna discussing a recent survey about the cost of buying a house in New Zealand.

Instructor 00:15

Okay, for this week’s assignment you’re going to assess the value survey on house prices. What were the survey’s findings? Was it a reliable survey? Work in pairs, discuss what you’ve read and generate some ideas for the assignment.

Man 00:33

All right, shall we work together Anna?

Woman 00:36

Sure, James. So first, how did the values survey actually measure the cost of houses? Because there are lots of ways of calculating it.

Man 00:45

Well, it looked at all houses, didn’t it? New and old. So it started with average incomes across the whole workforce and then worked out house prices in relation to that, I mean to what people were earning.

Woman 00:58

So it’s about affordability, what people pay in real terms, but there’s no information about the size of a house a typical family can buy.

Man 01:07

No, that’s a limitation. OK, then in the assignment we should give some background. I mean, what’s different about the value survey?

Woman 01:16

Yeah, there’s lots of these surveys every year. Value is actually one of the newer ones, but it stands out because it gives figures for a range of the largest urban centres, which none of the others do.

Man 01:29

Ok, good point. Then one finding was that New Zealand houses are relatively expensive. Why is that? Because most of them are built of wood, and that’s quite cheap.

Woman 01:40

Yeah it is, but the problem is there are too many regulations and restrictions about where you can build.

Man 01:46

So if more building sites were created for housing, the costs would come down. That’s it, isn’t it, because there are plenty of contractors ready to do the work.

Woman 01:55

Exactly. So, what else?

Man 01:59

Well, what about transport? I mean, it’s all very well to talk about new housing, but how are people going to get there? Is the survey proposing new roads, new rail networks? It should be a coordinated approach.

Woman 02:12

Yeah, but the survey didn’t mention it. It’s a missed opportunity, because a commitment to funding public transport from the outset would improve air quality in our cities.

Man 02:22

True. Okay then, the next survey, what can we expect? It’ll look at all the same places, right?

Woman 02:29

exactly the same. But the next one will give an idea of the way prices are moving.

Man 02:34

The government may have to think about how house prices are affecting society.

Woman 02:40

Then in the assignment, we need to evaluate how reliable the survey was, so we should look at some of the criticism made by commentators. OK, so there’s the economist Andrew Coleman. He actually questioned whether the survey was money well spent, because it only looked at a single year in isolation.

Man 02:58

A year when it was difficult to borrow money to buy a house, pushing up costs. So he thought the survey should consider a longer time frame. Did you get that article by Professor Messi? Because he’s the leading authority on this topic.

Woman 03:11

Yeah interesting. He realised the method used to calculate how much money people had didn’t take savings into account. So actually people looking for a house were richer than the survey shows, making houses cheaper in real terms.

Man 03:26

Alright, then Richard Bernard, his criticism was original, he found out they were using quite outdated software to process all the information they gathered, which was crazy because they actually had the money available for an upgrade.

Man 03:40

So even though it was a highly regarded team of people, the way the statistics were interpreted was open to question.

Woman 03:47

Okay, then Professor Lowndes, who thought the report was just badly written?

Man 03:51

That’s right. After all the work that went into gathering valid information, the finished report was just too long and weakly structured. And there was too much unnecessary detail.

Woman 04:01

and the last one, Maria Darling. She made a point about the properties that were evaluated.

Man 04:07

There weren’t enough of them, you mean.

Woman 04:09

No, it wasn’t that, but they were never identified for privacy reasons. But she thought the actual properties used should have been revealed, you know, the process should have been transparent if the people are going to have full confidence in the survey.

Man 04:23

Right, so a lot of criticism.

Woman 04:25

Yeah, but this sort of research is often controversial.