How Relevant is Median Data?

I wrote a little last week regarding the REIVs quarterly median statistics which contain revisions that typically occur some 3 months after the figures are initially released and therefore make the press release – accompanied by boom and bust media headlines – somewhat questionable once all results have been collected.

The reason figures are revised, is because all data providers suffer from a lag in reported sales results that typically filter in from the valuer general data – the most authoritative and comprehensive source of ‘settled’ sales information we have – over the 3 month period ‘post’ the quarterly release.

Albeit, at time of release, the raw data often goes hand in hand with somewhat bullish headlines which claim large increases or decreases, which can reduce significantly when the next quarterly bulletin hits the press.

APM have now released their own assessment of quarterly growth for Melbourne which contains similar subsequent corrections on previous releases – items of which are easily missed if you’re not used to digging beneath the headline content of their press release.

As an example, APM’s June’s results are showing Melbourne as the national leader in price growth, with a 5 per cent rise over the quarter, which equates to 6.1 per cent year on year.

However, if you read the fine print, it’s clear the robust increase resulted from a downward revision to their March quarterly statistics of around 2.2 per cent to $527,245. In fact, if you track back taking subsequent revisions into account, Melbourne’s annual price growth would be closer to 4.2 per cent.

So how much can we trust median data? Well essentially, median data is simply the ‘middle’ figure of all cited sales. Individual property prices, and the changes a property may go through in terms of renovation and extension, which would therefore warrant a higher capital price outside of natural increases, is not always represented in the information provided, and it should also be noted, that each provider uses a slightly different methodology when collating their statistics.

Notwithstanding, as mentioned above, the most reliable data we have, comes direct from valuer general which captures all settled property sales across Victoria with the one significant drawback – the time it takes to receive this information.

Only a market appraisal or valuation, taking into account essentials such as location, type, feel and the micro market for any said suburb, can provide this information. Albeit, it gives a broad indicator of the ‘trend’ in movements – and through the course of 2012, it’s clear interest rate drops and other stimulants incorporated to ‘boost’ confidence were not having an impact.

In this respect, when assessing Melbourne’s property market from the ground, it’s clear there’s been an improvement year to date – it’s one that’s been felt in most states – barring perhaps Adelaide and Canberra.

The recovery is largely led by investors and up-graders – the number of owner occupier housing commitments is up 15.1 per cent year on year, and as mentioned, it’s investors who are playing a far bigger contribution to price rises in Australia’s real estate market, with 36 per cent of loans going to this sector alone, and all states experiencing a rush to the perceived safe haven of bricks and mortar.

Year on year, Victoria’s investor numbers are up 11.3 per cent – This is also evident in the pace at which Australian buyers are fixing their mortgages – agreements of which comprised of 19.1 per cent of new mortgages in May after reaching 20.6 per cent in April.

Notwithstanding – It could be argued, that we haven’t even started to see the full impact of an investor lead surge towards real estate. As reported this week from the “new SMSF Professional’s Association of Australia and Macquarie Bank” according to the ATO, between 2006 and 2013, SMSF property assets grew in value by 230 per cent – ‘a higher growth rate than any other asset class.’ And, it’s the baby boomer generation aged 55 and over that are leading the way, highlighting our demographic headwind as the tsunami of retirees create expected significant craters in future government expenditure.

This type of activity is pinned on confidence – and it’s yet to be assessed if the forthcoming Federal election will create any significant impact. Albeit, as it currently stands, agents in the inner and middle ring suburbs of Melbourne are reporting stock levels which are not keeping up with buyer demand.

Catherine Cashmore

Weekend Clearance Rate Figures

Week Ending Sunday 28th July 2013

Clearance Rate:	71%
Total Auctions:	506 (36 unreported)
Sold:	358	Passed in:	148
At auction:	287	Vendor Bid:	97
Before auction:	69	Real bid:	51
After auction:	2
Total Private Sales:	456
Weekly Turnover:	814
Source: www.reiv.com.au

The NPB clearance rate is representative of the results evidenced in the ‘quality’ end of the marketplace. We take the results from a range of suburbs; however please note we are not ‘suburb specific’. NPB Melbourne, negotiate on hundreds of properties for their clients each year throughout all areas of Melbourne and the Bellarine Peninsula. The properties we highlight are taken from a selection which we carefully analyse for quality assessment and revise daily.

NPB’s clearance rate moving in line with REIV data – however it should be noted, the quality and quantity of ‘good’ listings are slowly reducing as we approach winter and it’s expected this could increase competition.

Weekend Clearance Rate Figures

Week Ending Sunday 28th July 2013

NPB Clearance Rate:	87%
Total Auctions Reviewed:	49
Sold:	43	Passed in:	6
Under $600k:	15		3
$600k-$1m:	19		2
$1m+:	9		10

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 49 properties reviewed by NPB this weekend:

< $600k

Suburb	Type	Beds	Quote	Result
Fitzroy North	Apartment	1	$290-320k	SOLD $363,000
St Kilda	Apartment	1	$310-330k	PASSED IN
Thornbury	Apartment	2	$340-$370k	SOLD $432,000
Essendon	Apartment	2	$370-410k	SOLD $397,500
North Melbourne	Apartment	1	$380-410k	SOLD $415,000
St Kilda East	Apartment	2	$440-470k	SOLD $495,000
Glen Huntly	Unit	2	$440-480k	SOLD $505,500
Camberwell	Apartment	2	$450k+	SOLD $521,000
St Kilda West	Apartment	2	$460-490k	SOLD $522,000
Thornbury	Unit	2	$420-450k	SOLD $535,000
Reservoir	House	3	$430-470k	SOLD $539,500
Balwyn	Apartment	2	$400-440k	SOLD $540,000
Hawthorn	Apartment	2	$450k+	SOLD $540,000
Greensborough	House	3	$470-520k	PASSED IN
Balwyn North	Unit	2	$480-530k	SOLD $563,000
Preston	House	3	$470k+	SOLD $575,000
Balwyn North	Unit	2	$450-490k	SOLD $592,000
Northcote	Apartment	2	$500-550k	PASSED IN
Sold	15
Passed In	3	NPB Clearance Rate 83%
Total	18

$600k – $1m

Suburb	Type	Beds	Quote	Result
Reservoir	House	2	$590k+	SOLD $602,500
Fitzroy	Apartment	2	$530-580k	SOLD $625,000
Murrumbeena	Townhouse	2	$480k+	SOLD $628,000
Prahran	Apartment	2	$580-630k	SOLD $633,000
Richmond	House	2	$550k+	SOLD $650,000
Mont Albert	Unit	2	$600-650k	SOLD $650,000
Ivanhoe	Unit	2	$570-610k	SOLD $665,000
Fitzroy North	House	2	$590-650k	SOLD $675,000
Glen Iris	Unit	3	$580k+	SOLD $690,000
Richmond	Apartment	2	$550k+	SOLD $699,500
Kensington	House	2	$620-670k	SOLD $701,000
Vermont South	House	4	$650k+	SOLD $786,000
Richmond	Townhouse	3	$680-720k	SOLD $817,500
Collingwood	House	2	$725-775k	PASSED IN
Abbotsford	Townhouse	3	$780-850k	SOLD $850,000
Northcote	House	3	$850k+	SOLD $875,000
Collingwood	Warehouse	3	$700-770k	SOLD $925,000
Collingwood	Townhouse	3	$800-850k	PASSED IN
Port Melbourne	House	2	$850k+	SOLD $950,000
Fairfield	House	3	$800-880k	SOLD $995,000
Port Melbourne	Townhouse	3	$900k+	SOLD $995,000
Sold	19
Passed In	2	NPB Clearance Rate 90%
Total	21

$1m+

Suburb	Type	Beds	Quote	Result
Brunswick East	House	4	$1-1.1m	SOLD $1,215,000
Box Hill	House	4	$900k+	SOLD $1,230,000
Essendon	House	3	$1.2m+	PASSED IN
South Morang	House	5	$1-1.1m	SOLD $1,360,000
St Kilda West	House	3	$1m+	SOLD $1,404,000
Richmond	Townhouse	3	$1.2m+	SOLD $1,410,000
Caulfield North	House	4	$1.2-1.32m	SOLD $1,420,000
Glen Iris	House	3	$1.05-1.15m	SOLD $1,550,000
Middle Park	House	4	$2.7m+	SOLD $3,055,000
Kew	House	6	$3m+	SOLD $3,362,000
Sold	9
Passed In	1	NPB Clearance Rate 90%
Total	10

Overall

Sold	43
Passed In	6	NPB Clearance Rate 87%
Total	49

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
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