How Much Have Prices Risen? It Depends On Who You Believe - AUGUST 2018
By Guest Blogger, Terry Ryder, founder, hotspotting.com.au and propertyU.
You’re entitled to believe that the level of price growth in a particular market is a matter of fact.
Prices are either rising or they’re not, and the level of growth (or decline) is a statistical fact.
But in reality, it’s nothing of sort. What’s happening in a specific market depends very much on whose figures you believe.
Because if you source price growth data from three different reputable sources, you’re going to get three different answers – and sometimes those differences are massive.
For example, how much have Canberra house prices risen in the past 12 months? The Canberra market is pretty solid, with vacancies low and rents rising strongly, and most sources have house prices increasing.
But how much? CoreLogic says 3.3%. Another big name in property research Domain says the growth rate is 6.2%, almost double the CoreLogic figure. And SQM Research claims the annual growth rate is 12%, which is almost four times the CoreLogic growth figure.
CoreLogic describes a moderate market but SQM suggests there’s a boom in Canberra.
How about Melbourne apartment prices? Domain suggests very little growth, with an annual rise of just 1% in the median unit price. CoreLogic is more upbeat, suggesting values have risen almost 4%, but SQM says the growth rate is 9%.
But the biggest discrepancies I’ve seen recently are in the Hobart apartment market. Hobart currently has the strongest property market in capital city Australia, with house prices recording double-digit growth (according to some, but not all, sources).
But how much are apartment prices rising in bullish Hobart? Well, according to SQM, they’re not rising at all – they’ve fallen 1.6% in the past year. But CoreLogic claims they’ve risen by 7% and Domain, somehow, has come up with a growth figure of 23%.
So we have one source claiming prices are falling and another declaring that they’ve risen a massive 23% in 12 months.
How do you make sense of this nonsense? The reality is, you can’t.
It’s important to understand that, notwithstanding the way media publishes these figures as fact, they're anything but.
It’s all dodgy data to some extent. Each research company has its own methodology and each claim that theirs is the best, but they’re all flawed to some degree.
It’s best to assume that all real estate numbers are rubbery figures and not to base big financial decisions on the statistics published in newspapers.
If you’re thinking of buying and can’t make sense of what’s happening in the market, my advice is to engage a good buyers’ agent who knows the local market values intimately. They can pinpoint value faster than a seagull latches onto a hot chip.