My 30 plus years Aussie property experience has seen me go through many cycles, and many shocks, economic changes, and changing legislation. Everything from Capital gains tax changes, GST, restrictions on loans, restrictions on foreign buyers and much more - stock crashes, the dot com bubble, SARS, the GFC and now coronavirus.
As a person who subscribes to many Australian property newsletters, essays, and opinion pieces, this is a critical question I want you to ask yourself. Do you want to believe what you read in the media, or (at least) consider the views of someone who has seen it all?
At the very least, I hope to bring you in bite sized bits, key points that are relevant to the market and investing.
CITYLIFE INTERNATIONAL REALTY
AUSTRALIAN HOUSE PRICE INDEX BY CAPITAL CITY
REAL ESTATE IS A LONG TERM INVESTMENT*.
THE MEDIA OFTEN TENDS FOCUS ON WHAT IS HAPPENING IN THE SHORT TERM WITH HOUSE PRICES.THIS CAN AFFECT INVESTORS VIEWS OF WHAT IS HAPPENING WITH PROPERTY PRICES.
REAL ESTATE SHOULD BE A LONGER TERM INVESTMENT, SO WE PROVIDE THE FIGURES OVER THE PAST 12 MONTHS - TO GET A BETTER UNDERSTANDING OF THE MARKET TRENDS OVER TIME - RATHER THAN JUST LAST MONTH.
(OUR CHARTS BELOW REFLECT THE "ALL HOUSES" INDEX UPDATE EACH MONTH TO REFLECT THE PREVIOUS 12 MONTH PERIOD, AND IS WE BELIEVE AN ACCURATE INDICATOR OF WHAT AUSTRALIA'S HOUSING MARKETS ARE DOING OVERALL.)
THE LINK TO THE LONG TERM TREND LINES ARE ALSO PROVIDED LOWER DOWN ON THIS PAGE.
NOTE: BOOKMARK THIS PAGE TO KEEP ABREAST OF THE CHANGING MARKET AS WE UPDATE IT EACH MONTH.
AUSTRALIAN HOUSE PRICES- MARKET TRENDS BASED ON ASKING PRICES FOR HOUSES
LAST 12 MONTHS IN AUSTRALIA'S HOUSE PRICES***:
PREVIOUS MONTHS ARE SHOWING BELOW
***SEE THE LONG TERM (Past 17 years) CAPITAL GROWTH FROM THE AUSTRALIAN BUREAU OF STATISTICS.
ARE THE AUSTRALIAN CITIES AHEAD OF OR BELOW THEIR LONG TERM TREND LINES?
THESE TREND LINES HAVE PREVIOUSLY BEEN QUITE ACCURATE IN "FORECASTING" THE NEXT DOWNTURN, OR UPSWING.
WHEN PRICES HAVE RISEN ABOVE THE HISTORICAL TREND LINE THEY TEND TO HAVE FALLEN BACK, AND CONVERSELY, WHEN THEY HAVE OVERSHOT THE TREND LINE, THEY HAVE COME BACK DOWN.
YOU CAN VIEW ALL CITIES WITH THE TREND LINES HERE.
1. UPDATED MONTHLY BY CITYLIFE INTERNATIONAL REALTY, AS PUBLISHED BY SQM RESEARCH AUSTRALIAN HOUSE PRICE DATA, RECORDED EVERY TWO WEEKS BASED ON WEEKLY ACTUAL ASKING PRICES.**
2. FIGURES AS SHOWN REFLECT THE PREVIOUS 12 MONTHS CAPITAL GROWTH OR CAPITAL LOSS BASED ON "ALL HOUSES" CRITERIA FOR THE CITY IN QUESTION.
**SQM Methodology Why Asking Prices?
Timeliness - comprehensive data that does not need revision as the sample size is complete. Being able to assess where vendors sit with the market is also very useful.
Do they have the confidence to be lifting their asking prices, or are they keenly dropping their prices in order to get out?! In compiling SQM Research’s new market indexes, we have been surprised at how reactive vendors and landlords are to the market. It is clear vendors are very responsive when considering the whole market on aggregate. Indeed, there is some evidence to suggest that they at times, drive the market, especially when it enters into a new upswing.
Base Methodology After considering all various house price methodologies, SQM Research came to the conclusion that using a stratified methodology based on geography for these new indexes, would be most optimal for the required task. SQM Research declined to use a hedonic model as there was negligible additional accuracy provided compared to the stratified model, which accurately adjusts for compositional bias. All capital city regions and city wide averages were stratified based on splitting postcodes into decile brackets. The decile brackets were calculated based on the relative long term median sold price ranking of each postcode.
SQM Research will monitor and update longer term pricing points and suburb rankings annually and make revisions to the decile bands accordingly. Subsequent revision of the index is expected to be negligible. All compilations of cities are based on the Statistical division of each capital city as measured by the Australian Bureau of Statistics.
Percentage of Listings That Have an Asking Price 89% of all listings captured have a price indicator. Listings that have an asking price range are included, using the bottom of the price range. Auctions are left out of the calculation unless an asking price is provided after the auction event. Vendor Discounting and the Effect on the Indexes Where a vendor has discounted their asking price, it is calculated in the overall aggregate median of asking prices in the index. There are no weightings applied to various asking prices based on age of listing or discounting.
***Explanatory notes Australian Bureau of Statistics (ABS)
Residential property prices are of significant interest to policy makers, market analysts and researchers for a range of economic and social reasons. This is because the housing market plays an important role in the Australian economy.
Residential property price indexes measure price change of the stock of residential dwellings over time.
The indexes serve the dual purpose of:
- a macroeconomic indicator of residential property price inflation
- supporting the compilation of the non-financial assets component of the household balance sheet in the Australian System of National Accounts.
How the data is collected
Price indexes and related statistics
The suite of residential property price indexes (from now on referred to collectively as 'the indexes') is:
- a residential property price index
- an established house price index
- an attached dwellings price index.
The residential property price index is an aggregation of the established house price index and the attached dwelling price index, and measures the price change in all residential dwellings within the eight Greater Capital City Statistical Areas (from now on referred to collectively as 'the capital cities').
Scope and coverage
The scope of the indexes:
- all residential properties in the eight capital cities
- restricted to dwellings where the primary purpose is residential, regardless of ownership and tenure of the occupants
- includes government owned properties and properties owned by private landlords
- excludes commercial properties.
Dwellings in scope of the indexes are:
- Ordinary detached houses
- Houses with offices
- Houses with flats
- Rural residential houses (within a capital city and not part of a farming business)
- Semi-detached, row and terrace houses
- Flats, units and apartments.
The price indexes and related statistics are compiled from analysis of a quarterly dataset of all Australian residential property sales. The sale price is the price agreed when contracts for sale are exchanged. The exchange date most closely approximates the time at which the market price is determined.
Sales are attributed to the relevant quarter depending on the date of exchange of contracts. Exchange date information is available for all cities except Adelaide and Darwin. For these cities, a modelled exchange date is used.
Standards and classifications
Capital cities are defined as Greater Capital City Statistical Areas, as described in the Australian Statistical Geography Standard, Vol 1. These areas capture the socio-economic extent of the state/territory capital cities for statistical purposes. This definition applies from the December quarter 2013 issue of this publication.
For earlier periods, capital city regions are defined in terms of Statistical Divisions under the Australian Statistical Geography Classification. Historical naming conventions (for example, Sydney rather than Greater Sydney) have been maintained. A time-series is available but users should exercise caution in interpreting medians and numbers of house transfers over time, as historical data will reflect capital city boundaries as previously defined. This is particularly significant for Canberra, where the capital city is now defined to be the whole of the ACT.
The portion of each state or territory outside its capital city region is referred to as the rest of state.
Where table headings indicate that the estimates relate to the rest of state or whole of state, the Australian Statistical Geography Standard is used to determine boundaries. For example, the total value of the dwelling stock relates to each state or territory.
All Australian residential property sales data are supplied to the ABS by CoreLogic. (See Appendix: CoreLogic disclaimer and copyright notices). This dataset is a combination of residential property sales data obtained from state and territory land titles offices or Valuers General offices, and real estate agents' data provided to CoreLogic. The ABS applies classifications to this dataset to create the residential property sales dataset from which the price indexes and related statistics are produced.
In compiling this we rely upon information published and publicly available by SQM Research and the Australian Bureau of Statistics. The information is supplied on the basis that, while Citylife International Realty believes all the information in it will be correct at the time of publication, it does not warrant its accuracy or completeness and to the full extent allowed by law excludes liability in contract, tort or otherwise, for any loss or damage sustained by readers, or by any other person or body corporate arising from or in connection with the supply or use of the whole or any part of the information in this publication through any cause whatsoever and limits any liability it may have to the amount paid to Citylife for the supply of such information.
The data and projections should be used as a guide only and should not be relied upon in making any investment decisions whatsoever.