Property Pulse

This week's release of the RBA sponsored Housing Price Series indices prompted some excitement in the property market. The new data aims to provide a more accurate picture of citywide and national house price movements. The property market is rife with questionable data, so the new data is a welcome boost to monitoring the big picture.

But for many individual investors trying to choose a particular property to match their personal situation and financial goals, relying on big picture data is often not very helpful.

Why?

Well, contrary to popular belief, not all property works in the same way. Think about the sharemarket, which is broken down into resources, industrials, technology, telecommunications, infrastructure and so on. Each type of stock performs differently depending on company performance and sharemarket sentiment. And each company within a category performs differently too, depending on factors like corporate decisions and productivity.

The property market is no different '” there is established property, new property, commercial property, residential property, urban property, country property and so forth. And because property is three dimensional, each one has a different 'look and feel’. This means people can attach an 'emotional premium’ to a particular property '” a value that goes above and beyond its technical market value.

The net result is that trying to choose one property based on changes in the citywide or national median value is like picking one stock based on movements in the All Ordinaries '” it’s simply too broad a measure to be of any real use.

To get a more accurate indication of how a particular property has performed, you need data specific to that type of property, not just the suburb or city in which it’s located.

For example, if the property is a 3 bedroom weatherboard home, you need to look at recent sales results for properties of similar land size, construction and number of bedrooms in the immediately surrounding area.

Auction action

In Melbourne, advertised auctions jump from 352 to 457 this week; a sign that the traditional Spring auction season is well on track for a strong return.

Sydney’s auction count is up from 189 to 213. This is the fifth consecutive week of increasing supply, and the first time in more than two months that auction numbers have increased beyond 200. While it’s early days yet, the improvement in auction volumes could be a sign that vendor confidence is on the rebound.

The picture looks different in Brisbane, where advertised auctions drop from 165 to 157.

Opportunities

Melbourne provides the most opportunities for savvy investors this week, with significant supply increases in several areas. In the inner west, advertised auctions jump from 29 to 42, while in the inner south they rise from 71 to 102. In the northern suburbs, 78 auctions are advertised for this week, compared with just 55 last week. In the bayside area, the number of auctions more than doubles from 21 to 44.

In warmer climates, the Gold Coast hosts 51 auctions this week compared with 36 last week; bucking the Brisbane district’s overall downward trend.

Minefields

In Sydney’s inner east, auction numbers drop from 75 to 67. The determination of purchasers often rises in inverse proportion to the number of properties available. So does the purchase price, so keep a rein on those purse strings!

Mark Armstrong is the Director of Property Planning Australia.