Confusion reigns as industry rains dodgy data.
It’s not a new problem but it seems to be getting worse. The muddle of conflicting statistics constantly churned out by the property industry is making it almost impossible for anyone to pinpoint which markets are doing well and which are not.
Here’s an example. What is the median house price is Perth at the moment and where does it sit in relation to Melbourne’s and Sydney’s?
According to the RP Data-Rismark Hedonic Index, it’s $505,000, the highest in the nation outside of Sydney and $100,000 higher than Melbourne’s. The Real Estate Institute of Australia says it’s $446,000 – just $26,000 higher than Melbourne’s.
If you believe RP Data, Perth had a higher median price than Sydney until recently. But now it’s $55,000 lower. The REIA says Perth’s median house price is $80,000 less than Sydney’s while Australian Property Monitors records a value gap of just $25,000.
Melbourne’s median house price is $403,000 or $$420,000 or $395,000, depending on whose figures you choose to believe.
In Adelaide, the median unit price is $246,000 according to Residex, $228,000 according to Australian Property Monitors or $281,000 if you believe the RP Data-Rismark Hedonic Index.
The Residex figures claim that the highest capital growth for houses over the past 12 months has been seen in Brisbane (14.6%), followed by Darwin (14%), Adelaide (13%) and Melbourne (12%). Canberra did only 9.5%, Sydney 4.1% and Perth only 3%.
Australian Property Monitors, on the other hand, says Canberra had the highest capital growth over the past 12 months with 17.6%, followed by Brisbane (12.8%), Darwin (11.6%), Melbourne (10.8%). Adelaide did only 9.8%, Perth managed 8.7% and Sydney values fell 0.2%.
In one set of figures, Canberra leads the nation by a country mile, and in the other it’s a distant fifth with half the growth quoted by the first source.
In the June quarter, the star performer in house price growth, by a long way, was Melbourne where values grew more than 10%, double the growth of the next best city – according to the Real Estate Institute of Australia. But Australian Property Monitors says Melbourne prices grew only 6.5%.
Australian Property Monitors says the leading city in the June quarter was Canberra, where the median house price increased 7.4%. But according to the Real Estate Institute of Australia, Canberra was one of the worst performers among the capital cities, with just 1.9% growth.
I could go on – and on – but you get the picture. And the picture is a mess – a muddle of conflicting information, constantly being spewed forth by the property research industry and regurgitated without scrutiny or analysis.
The outcome is a headache for property buyers and sellers trying to make sense of what’s happening in the market.
If you’re a serious and diligent investor, this is big concern.
Take an exercise I was doing recently to determine what’s happening in Gladstone. This industrial port city is one of the nation’s most compelling hotspots, with massive infrastructure development fuelled by the resources boom creating an influx of workers looking for someone to live.
So I want to know how prices are moving. The trends and anecdotal evidence suggest they’re rising rapidly.
I looked at the latest figures on median prices from the Real Estate Institute of Queensland and they gave a clear impression of massive growth in values this year. But data from Australian Property Monitors on the same Gladstone suburbs painted a vastly different picture – still good growth but nowhere near the same levels.
The REIQ says the median price in South Gladstone is $314,000 but Australian Property Monitors says its $267,000. The first source says the typical Glen Eden house costs $422,000 while the other says its only $339,000.
These are big differences and they create nothing but confusion. How can there be such massive anomalies?
I can’t answer these questions and neither can anyone else I speak to.
But here’s one thing I’ve noticed. Whenever I come across price figures that appear inflated relative to data from other sources, the inflated numbers come from a real estate institute.
In the case of Gladstone, the figures from the Real Estate Institute of Queensland paint a far rosier picture than data from other sources. With Melbourne, the Real Estate Institute of Victoria would have us believe that the market is charging ahead and leading the nation – but other sources don’t support this view. It’s the same in Hobart – the institute figures depict a thriving market but other sources disagree.
So here’s a tip: if you have two sets of conflicting numbers, disbelieve the ones that come from the institute.