With all the hype about the property bust gets me thinking. Do property prices actually go down or is it merely the market shifting from purchasing more and more expensive properties to more realisticly priced? This being the case the median prices would decline.
The most recent property analysis for my suburb showed a -0.5% change in median price but in the same time I have seen a property in the same block as my investment property ( a 3×2 townhouse) sell for almost $100,000 more than I bought for over the same period and represents about a 45% increase!
So all this hype about median property prices etc is basicly just that, hype. At least that’s how I see from this little life experience.
To say that a median price has leveled off or decreased represents a bust is all very good, but what did that represent?
Later………
how long ago did you buy this property??
Lies, damn lies & statistics….
Looking at suburb by suburb (or small town) medians. It’s easily possible for a single developer to have a large influence on the median price.
Say in a suburb of 10,000 people – 4,500 houses….of which 650 are sold each year – 300 houses & 350 units.
A developer who builds 50 units & sells them in a short period has a huge influence…at peak times they sell above market price, hence inflating the median…then the next year when only older units are sold the median falls.
Happens all the time.
Look at the long-term trends & what is actually happening in the area to get a true picture. Median price is simply one of the indicators.
Cheers,
Aceyducey
I tend to look at sales volume, to determine what’s going on in the property market. If sales volumes are high, people are buying property, hence prices rise.
Hi Hot Rod,
Individual property prices can go down as the final sale is dependent upon that seller and buyer at the time.
There was an article in the weekend press (Age(?) Can’t find it now – sorry [dunce]) that listed around half dozen examples of property resales that showed a decline in ‘value’.
Derek
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I agree that using a median average can be very misleading. I would suggest looking at many indicators: median average, medium average – both split by land, hosue and units. You also need to get a feel if this is people just selling improvements on the land or if the land itself is rising, though one can influence the other. I would also look at % ownership of investment vs owner occ (as investors will probably sell as prices rise which will keep prices cooled). Look at the surrounding suburbs and how they have performed and why. Getting back to your initial point, I can easily see why your gut feel doesn’t tally with the reported median movement. I have read median price reporting for suburbs before and know for a fact that they are well under reported because I have sales that I personally made that are awaiting settlement and will push it up. Aceyducey made a good point too. I know of a suburb that is very sleepy as far as sales turnover goes. When we release a development product in there shortly it will blow the median price out of the water and will show some statistically very large increases for all properties in that suburb. Does that truly revalue the older stock around it?
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
The adelaide paper listed all suburbs median prices at the weekend for 2nd quarter 2004 and 2nd quarter 2003. Our suburb looked as if it had gone down in price, but only 9 sales had taken place.
Surely if it just happens that more small units or 2 bed houses sell in one quarter and the other had the large houses with views, wouldn’t this affect the outcome of the stats without it being a realistic guide?
How do you tell in suburb where that is average number of sales in quarter what is really happening?[blush2]Hi Misty – I would say with a reasonable degree of difficulty. It demonstrates that the research side of it takes more than looking at one table of numbers. I would also say that you need to use your gut instinct when buying property and look to the future not what was great yesterday… trying to predict future demographic demand, rezoning possibilities etc etc.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
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