Everybody is watching and desperately trying to “judge” the property market. Economists, analysts, agents, buyers, sellers, lenders, even the Reserve Bank have their eyes firmly focussed on real estate as they attempt to predict what’s ahead.
This added interest is not just a “spring thing” – although the thousands of extra homes that hit the market during spring seem to act like spotlight on the sector. But, no matter what they each predict or forecast, nobody really knows what’s going on. Australia’s residential property market largely operates in the dark.
Of course, there are several highly professional organisations that track sales but most of this information is supplied by a third or fourth party or is put through someone’s “filter” first.
The only ones who really know what’s going on are the various state government organisations, such as titles offices and property tax collectors. But, although they have all the facts and figures, the information is not collated and available for months, often six or 12 months later.
That’s why in any week we can have reports of 17 per cent price rises, while others report 12 or 5 per cent. Some commentators say there’s a price bubble, others say not. Some say rentals are rising, others say not.
At any time, regardless of who’s saying what, you can never go wrong sticking to the basics.
If a property is available for sale below replacement value, if it’s earning a strong return, if it has capital gain potential and the location and property type are what you want, then it’s a good buy. If these basic fundamentals don’t stack up – no amount of wishful thinking, adjusting interest rates or calculations based on exuberant rents is going to make it a good purchase or a less risky purchase.
There’s a lot of guesstimating and trend spotting going on out there. Don’t get side tracked, stick to the basics.