Reading between the lines.

By Toby Campbell | Senior Property Consultant

Developments and changes in the real estate market is a hot topic for news publications and recently, it seem’s like any news at all can send shockwaves through Australian’s home ownership dreams. This information comes from many sources, some reputable and some downright confusing. So what information can you trust and how can you read between the lines?

Personally I keep myself well informed of all property news across allmediums usually during my morning caffeine hit… or three, but to actually call any of it ‘news’ is taking it a touch too far, if I’m honest. As is true with journalism across the board, it’s important to note that almost all articles in relation to real estate are opinion pieces, with the author interpreting the data with their own inherent bias at play.

Whilst conflicting opinions can open up a conversation, it can also lead to confusion, and sometimes, panic. See the two examples below, both headlines from leading online property sources, both posted within 24 hours of each other.

Melbourne’s $2 million+ homes pass in as trophy home buyers dry up.

Melbourne’s 2018 auction market passes first test, experts say.

So what is the reason for such a disparity in the reporting and how do weread between the lines?

Well, real estate price data in general is very hard to gauge week to week, month to month and even year to year, as property price trends are not an exact science and as with so much data, it’s all too easy to manipulate and skew to whichever way the bias lies.

Let’s use our East Melbourne as an example. House prices rose from an average of $2.6 million at the close of 2016 – to a staggering average of $3.9 million at the close of 2017. But has the market actually increased by 50% in one year? Maybe – but probably not. The sample is a small one – with only 22 homes selling in 2017. The increase is most likely due to larger homes being sold in 2017 compared to 2016, rather than a large upward swing in the market. (To all of our East Melbourne homeowners – don’t get me wrong – it’s a fabulous time to own and sell in the suburb!)

Another small sample is one we collect every Saturday, on auction day. Across Victoria we saw 1,385 properties go under the hammer on the 24th of February, 2018.  That’s out of a total of 2,520,912 dwellings in the state. How do we find genuine certainty in the 0.054% of properties that sold in the state? Can this sample reflect the value of all homes in Victoria?

So how are we meant to navigate the varied and potentially incorrect opinions? For me, I guess like any piece of journalism or new information, I know my trusted advisors, what to discredit or discard and what I believe.

How do you make sense of it all?

Have a great week,

Toby Campbell | Senior Property Consultant 

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Reading between the lines.