Are you in a data daze? If you’re suffering analysis paralysis or even just puzzled by statistics, some clarity from a data expert may be just what the doctor ordered. Tim Lawless, RP Data National Research Director, answers agents’ questions.
What is the outlook for property transactions – are we oversupplied? Or undersupplied ?
In August last year the number of residential property transactions bottomed out at about 31,000 sales – a level not seen since 1997. Since this time sales activity has increased consistently and is now running right on the five year average of about 39,000 transactions each month. We would expect sales volumes to track around the average over the coming twelve months. The pullback of first home buyers is being balanced by more investors becoming active in the market and more upgraders as well.
How are houses and units comparing? What are the investors going for?
Nationally, units are actually outperforming houses in the capital growth stakes. Over the first eight months of the year units returned a capital growth rate of 8.5 per cent and house values increased by 7.7 per cent. Also, units are providing strong rental yields. Nationally, units return a gross yield of 5.1 per cent and houses return a gross yield of 4.3 per cent. Over time, units have historically provided stronger rental returns, however, the stronger capital growth associated with units is a new phenomenon. The stronger rates of growth can be attributed to higher demand for unit stock due to their more affordable price tag and growing demand for unit living from various sectors of the market including empty nesters, overseas students and young professionals.
With interest rates on the rise, what is the outlook for the Australian property market?
To provide some perspective, when residential property market values were growing rapidly in 2007 mortgage rates were between 8 per cent and 8.55 per cent. In the boom of 2001 to 2003 mortgage rates went as low as 6.05 per cent and were averaging 6.6 per cent. The market will tolerate successive increases in interest rates to a certain point, however, if mortgage rates break the 8 per cent mark there would likely be a more serious dampening of demand in the market.
What do you believe vendors and buyers really want to see in a Comparative Market Analysis?
The most important aspect of a CMA is to provide real examples of recent home sales that are comparable to the target property. One of the most frustrating experiences for a vendor would be to receive a CMA report that includes examples of property sales that are outdated and that don’t provide any relativity to the home they are looking to sell. RP Data collects a great deal of information directly from the market place to ensure that CMA reports include the most up to date information. RP Data’s CMA reports also show properties’ attributes: number of bedrooms and bathrooms, land area, pictures of the homes and of course the most up to date sales data as possible.
How do you manage a vendor’s expectations re the value of their property?
One of the key skills a Real Estate agent should possess is an ability to educate their clients. Providing a prospective vendor with a thorough and accurate understanding of the local property market conditions, including what homes have sold recently, what level of buyer interest is in the market, and what stock they are likely to be competing with should provide the vendor with peace of mind when setting a listing price. Once the property is in the market a Real Estate agent should be giving their vendor constant feedback about buyer feedback and changes in the local Real Estate market such as information about new homes that have entered the market and existing listings that have recently been sold.
What functionality should I look for in a data supplier?
From our point of view here at rpdata.com, we don’t simply rely on Valuer General data which can often be several months old before being delivered by the State Government. We are proactive in our data collection and work collaboratively with the Real Estate industry to gather recent sales data, property attribute information and detailed knowledge about stock that is currently listed for sale. Every year we spend around $9million on acquiring and cleaning our data and matching our data sets with complementary information such as demographics, maps and geographical information.