Residential property market statistics are plentiful and easy to find. This data indicates how a market is performing and is ideal for brokers and home buyers. However, if you don’t know what these stats mean, then they can be confusing. Plus, it can be time-consuming wading your way through all the data.
So rather than letting you aimlessly search through information, let’s look at the five most important stats now. We’ll also define how you can use this information.
Firstly, the median price is the ‘middle’ value of all property market prices for a specified time. For instance, let’s say the median value of a suburb is $300,000 for September 2016. Hence, half the property listed in this suburb sold for less than $300,000 over this time. On the other hand, the other half sold for more than $300,000.
Understanding what median prices mean gives you an excellent indication of specific market performance. Ideally, you want the median value of a suburb to be increasing. Strong growth over a long duration is favourable. Consequently, to use this data accurately, you need to determine which suburb you’d like to watch. Also, define the type of property – house or unit – that you’d like to buy.
Next, type the ‘suburb name’ and ‘median home values’ into a search engine. This strategy will then turn up the latest results. You can then review these stats to determine if the area represents a sound investment.
A rental rate is the ‘asking price’ for a property’s lease. Thus, you want your investment property in an area where rental rates are growing. If rental rates have little growth, then this indicates that demand for rental property is slowing in this region.
At present, rental rates are falling in Brisbane, Adelaide, Perth and Darwin. Although, not all suburbs in these area have low rental rates. For this reason, it is important that you look at individual suburb data not just the city as a whole.
Clearance rates refer to the number of homes sold or ‘cleared’ over a specified duration. The most common rates encountered are percentages usually over a week or a month. With this in mind, a low rate is typically under 60%, and a high rate is over 79%. These figures show whether a market is in demand or not.
As a general rule of thumb, a good guide for auction rates are as follows:
|Auction Rate||Market Conditions|
|Over 80%||Very strong|
|70 to 80%||Strong|
|60 to 70%||Moderate|
It’s also important that you look at the number of auctions that have taken place in a property market. Very compelling evidence suggests a strong market has the high clearance rates and an increasing number of auctions. Whereas a slowing market typically has a lower auction rate and a decreasing number of auctions. CoreLogic RPData is an excellent source for clearance rates and auction numbers.
Lower interest rates typically mean more affordable the property. Currently, interest rates in Australia are at record lows. But it’s important to realise that lending guidelines have also tightened. In other words, it is now harder for investors to borrow money.
Lastly, the supply of property indicates whether too much housing development is in an area or too little. One great source for this data is the Australian Bureau of Statistics. Approval data will enable you to see whether a suburb has many or too few approvals. Just bear in mind that not all approvals reach completion. However, the majority will.