A 67% clearance rate on any normal weekend may justify some thoughts as to where the market is going. But there were only 145 properties passed in. This is less than half of the number passed in the previous week. Only 145 people failed to sell their properties on the weekend. Next weekend there are over 1400 auctions scheduled. Show me a clearance rate below 70% then and there will be plenty of worried vendors. With Easter the following weekend, we expect plenty of vendors and Agents will be ready to negotiate a lot more readily than has previously been the case.
Statistics are fantastic. You can make them say whatever you want. As far as increases in Melbourne Median price we have three sets of figures we can look at. The increase in Median house price for the December Quarter 2007 compared to that of 2006 was 23.4% whilst the movement from the previous quarter was a staggering 12.8% (so movement for a year based on this number would be 51.2%: 12.8% x 4) whilst the yearly median house prices 2006 to 2007 was only 12.6%. In other words, what would you like to hear: house prices moved 12.6%, 23.4% or the equivalent of 51.2%?
Choosing which properties to buy is not a matter a statistically analysing the market and then making your purchase. You do not buy “the average” property. You do not buy “the median” property. There is no doubt we need to look at data, but the key is knowing which data is useful. It is knowing what groups of data contradict, or enhance your analysis. Knowing how to break down the information into useable chunks is important.
Whilst an area we have bought many properties in has shown a yearly movement of only 16%, the area within Seaford where we have bought several properties has shown prices growing from around $300k to around $380k over 12 months and then further movement up to the low $400’s within the last 4 months. We also know that Eastlink will open shortly and therefore a further rise throughout the area is probable.
History suggest that properties over very long periods of time usually appreciate between 7% and 10% pa. That means they double in value every 7-10 years. To be an average, this means there will be some areas above this mark and some below. Properties that consistently appreciate 10% – 15%pa are what we target as good capital growth prospects.
There will be a lot more properties coming onto the market in the coming months and the good properties will still sell very well and even quicker than they did last year.