Property Market Research – What Are The Statistics Saying? (Part 1)

melbourne property investment research (p1)

There is lots of information available on the performance of the property market, both historical and forecasting. Some of the leading research companies such as ABS, VGV, REIV, RPdata, CKC, NLSP, and many others do a great job in compiling the relevant data and creating useful information out of it for us to make more informed decisions about property.

However, the sheer volume of information can sometimes be a little overwhelming, so where do you start?

Sales prices are the usually the first and most commonly sought after statistic. They can however be represented in many forms including the most common ‘median price’, and various Indices such as House & Unit Price index (HPI & UPI) and Home Value Index (HVI), where recent sales data is ‘value’ adjusted with specific information on variables such as location, land size, number of bedrooms etc. You may also have come across ‘seasonally adjusted’ figures which take into account and I suppose, level out seasonal movements based on history.

They all have their pros and cons and are somewhat normalized so are good to get a sense of general trends, but there always seems to be discrepancies between different sources and that is why in the end we prefer the ‘raw’ middle (or median) price based on actual sales prices over a period, preferably settled.

Of course there could be large variations between sales prices because each property has its own unique characteristics, but if the number of sales is large enough you won’t be too far off a reasonable comparison over time, in any given area.

You would have also seen plenty of information on sales volumes, mostly relating to the number of auctions and their clearance rates. In isolation, these statistics can provide some valuable insight into the level of demand and a better picture of the property market’s overall health when coupled with price growth trends.

They are only part of the picture however. Non auction sales (or private sales) are also important as combined with auction sales, provide a more accurate picture of the total number of actual sales volumes in any given period. Unfortunately these private sales statistics are sometimes more difficult to find (or take a little longer to publish), possibly causing the total sales volume – although important – to be somewhat underutilized.

Sales Price and Volumes – The Primary Indicators

We like to refer to sales prices and volumes as primary indicators because at Landeq they help paint the initial picture of the property market, and are the key inputs in any property development feasibility. The volumes are less critical to smaller scale developments, but they can still tell a story about general demand (and therefore ‘sellability’).

As indicated in a previous article on valuations, a balance between supply and demand across the economy is critical to real sustainable growth. History has shown that if price growth is not supported by relatively consistent volumes, it usually means the supply / demand equation is imbalanced, so its worth exploring a little further into ‘other indicators’ to see what they can tell us.

We will have a closer look at some of Melbourne’s property statistics in our next blog. Stay tuned….