Property Values Dropped? Where? I Want To Buy There!
An ongoing issue with the reporting of real estate sales activity is causing many home buyers to ‘wait’ for prices to fall as media reports focus on the sensationalism rather than the facts.
Median values will always be impacted by the mix of properties sold over any given period. If 150 properties are sold for a combined total of $120 million dollars, then that would make the median or average value around $800,000
If the next 150 properties were sold for a total combined value of say $105 million dollars, that would make the median or average value around $700,000
Does this mean values have dropped by 12.5% OR are people buying lower priced properties?
Misleading reporting on real estate values is an ongoing issue. Relevant reporting would delve further into median pricing by considering where the bulk of sales activity is and what sector of the market experienced the most sales, rather than superficially looking at just the numbers, then sensationalising the reporting and making distorted claims about the property market dropping by whatever percentage!
A 3-bedroom apartment in postcode 3002 will cost you around $1.3m today, a year ago it would have been around $1.2m, year prior around $1.15m. There have been less sales in postcode 3002 this financial year than last, so does that mean the values have dropped? No, it most likely is a case of more people choosing to maximise their purchasing power through buying in affordable suburbs within their borrowing range. If more entry to mid-range properties are selling during a set period, collectively, it’s going to make the general median price appear lower.
But when the overall property sales numbers are crunched by the experts, they sensationalise the situation by saying prices are tumbling, when in fact they are not.
A few months back we wrote how some first home buyers that could have/should have purchased three years ago in their chosen suburb for $380k and today find they need to spend around $500k for the same property. Many didn’t buy then because media at the time was commonly reporting prices are crashing, so many buyers decided to wait! And they are still waiting! These buyers in fact need to find an extra $120k for the same property, whereas according to media reports, prices should be less today than what they were then.
In 1970, a modest 3-bedroom home in suburban Melbourne would have cost around $15-$20k - today you need around $800k, so where have the prices crashed and tumbled?
The experts (as they like to be referred to) need to get better at the way they report the facts; instead of saying ‘prices have tumbled by 10%’ they would do better to explain the whole story being ‘sales activity in the more exclusive suburbs this quarter have slowed with many home buyers choosing more affordable suburbs making the overall median value fall slightly by around 10% for this quarter’… But then, this type of reporting probably wouldn’t make people click on their link……..
Please feel free to call me on 0438 041 111 to organise a time for a confidential discussion on your own situation and how we may be able to help secure your property purchase.
As always, enjoy life, work hard, play safe and remember that we are always here to help you
‘Take the Confusion Out of Lending’
Peter Vinci - 0438 041 111