The Brisbane market: How do you know what it’s really doing?
Keeping track of the value of your property is important, but there’s no simple way to really keep a handle on the Brisbane market day to day. One of the most quoted monthly stats is a theoretical number produced to give a real-time estimate of changes. Another that often makes the headlines has a sample size so small a Year 11 stats student would argue it can’t be representative.
So as we read this week that “Brisbane house prices hit record-breaking highs”, we take a look behind the headlines to help you make your own mind up. Is the Brisbane market really as strong as we’re hearing?
The best source of property price data is the settlement info lodged with the state government each time a property changes hands. Across most Brisbane suburbs we’re witnessing strong price rises, especially in houses. Of course it’s only tracking the trends up, down or sideways of the properties that actually transact, and this can be weighed by a particular trend such as a big quantity of larger and dearer homes lifting the median up. But it’s the only complete evidence we have of what buyers are actually paying.
Our team’s quarterly market reports track this data because we want to see where buyer sentiment is heading, actual sale trends, in each of the suburbs we report. Naturally it’s this data we use to prepare a market appraisal and Comparative Market Analysis – the numbers you need to price your property for sale.
So why do you rarely see it in the media? It takes the best part of 3 months to fully report and today’s info-hungry consumers want more immediate trend info than that. The ABS report on this – in mid March they gave their December 2020 report: Brisbane home prices rose 4% for that year.
The numbers you’re usually reading in media are from the CoreLogic Hedonic Home Value Index, produced on the first day of each month. On May 1st they told us Brisbane home prices rose 1.7% during April, now up 8.3% over the past 12 months.
In short, this index attempts to report an estimated value of every property using recent sales data combined with information about the attributes of individual properties. By distinguishing how much of a property’s price is due to its size etc they aim to see what’s actually changing from the “underlying residential property market.”
Using that regression method they apply an understanding to all properties, even with no recent sales data. It’s theoretical, albeit based on truckloads of real market evidence and we, like most Brisbane real estate agencies, trust its overall integrity. And it gives the media quick time commentary.
Auction clearance rates are now regular property fodder for the weekend media, as the TV cameras record another front yard crowd anxiously watching a hammer-wielding auctioneer. There’s no more public a measure of market sentiment than bidding activity at auction, so the percentage that sell (which includes contracts agreed before auction day) is a popular statistic.
One major Brisbane auction group reported last weekend’s clearance rate as 82.2% and in a city that usually reports 50-60% it’s another confirmation that buyers are competing and is something of a ‘forward-indicator’ of prices rising. But to put this in context, Brisbane agents auction just a tiny proportion of all properties and, even then, there’s no authority reporting conclusively on results. It’s a tiny, tiny sample of all sales and should be read with plenty of caution.
The time it takes to sell a property, its Days On Market, is another measure seeking to show the strength of the Brisbane market. CoreLogic report this by suburb, measuring from when they first see an advert until the date agents report the sale. Naturally this shortens as buyer activity ramps up and it’s often a precursor to price rises.
In South Brisbane right now the median apartment DOM is 54 days and that’s well down on 2020’s highs of 90+. Interestingly in a rising market like we have now this number can rise temporarily as some ‘old’ listings sell: we recently achieved full asking price for one property that had spent 808 days on the market!
One of the key numbers our sales team track is the discount from the owners’ list price to the actual sales price. That’s averaged just 1.6% over the past 12 months, with several of our sales at asking price and above. Again, a reliable measure (if a small sample) of a strong sellers’ market where buyers must pay or even exceed the list price.
Hopefully we’ve helped make some sense of the various Brisbane market data you’re reading and encouraged your skepticism. Unlike a share price on the ASX, there is no one measure of how much each property’s price is changing. But on any reading of the current market, Brisbane is enjoying a golden run.
Whether you read today’s stats or tomorrow’s, we’d suggest they’ll say the same thing: Brisbane home prices are rising across the board.
Our sales team are dealing with buyers every day and have their fingers on the pulse of the market. They’d love to help you with an updated appraisal for your property.