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Beware of Statisticians who don’t attend auctions.

You can rarely make generalizations about property markets in major cities. Unfortunately many statisticians are prone to such errors. Generalizations about property markets are based on the incorrect premise that all properties perform the same from a capital growth perspective. Unfortunately most statisticians who are not in regular contact with buyers and sellers or attend auctions regularly make incorrect observations.

Major cities such as Melbourne and Sydney are made up of many property segments. These segments all behave differently at different times of the property cycle. For example Melbourne is made up of the CBD apartment market, the St Kilda Road market, the inner city quality property market, the mortgage belt market, just to name a few. These sectors are predominately made up of residential properties .There is also the retail, commercial and industrial markets which operate under a totally different set of dynamics. Many statisticians rely on figures from the Australian Bureau of Statistics and then make assumptions that all properties in a city with over 4 million people will perform the same. This analysis is too simplistic. Unfortunately many statisticians do not understand the fundamentals of real estate.

There is no doubt that in the quality segment of the market i.e. properties within 2 to 15 kilometers of a major city which possess  scarce and unique features are situated in high quality streetscapes and are in close proximity to important amenities will double in value every 7 to10 years. This has been proven by sales results on many occasions over a long period of time. There is also no doubt that properties that do not have these qualities will take substantially longer to achieve the same capital growth. Choosing the right investment to gain the maximum capital growth is as important with property as with shares. The saying "lies, damn lies and statistics" can be applied when analyzing the property market.

 

 

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