How can you grasp real es­tate in­dus­try?

Whitsunday Times - - REAL ESTATE - Con­sumer tips pro­vided by REIQ

THE state of the real es­tate mar­ket in Queens­land, and more broadly, Aus­tralia, can be hard to fathom with of­ten con­tra­dic­tory me­dia re­ports declar­ing the mar­ket was ei­ther headed over a cliff or that good times were ahead with real es­tate de­liv­er­ing prof­its in the bil­lions!

For those who are dip­ping their toe into the real es­tate mar­ket for the first time, or are fledg­ling in­vestors, it can be con­fus­ing and you could be for­given for won­der­ing which story was the true story about the state of real es­tate.

The Aus­tralian Fi­nan­cial Re­view re­cently re­ported on an in­for­mal in­ves­ti­ga­tion by two fi­nance pro­fes­sion­als, Bronte Cap­i­tal chief in­vest­ment of­fi­cer John Hemp­ton and Vari­ant Per­cep­tion economist Jonathan Tep­per, who toured western Syd­ney and met with 20 mort­gage bro­kers.

Both men con­cluded that the hous­ing fi­nance sit­u­a­tion was dire and that “Aus­tralia now has one of the big­gest hous­ing bub­bles in his­tory”.

Fol­low that re­port with the re­cent ABS data that in­di­cated that “real es­tate pro­duced $8.6bn of tax­able profit in a quar­ter, ahead of (min­ing’s) $3.6bn,” as re­ported by the Syd­ney Morn­ing Her­ald last month. Are things dire or are they boom­ing? The sim­ple fact is that these re­ports are not con­tra­dic­tory and one does not mit­i­gate the other, but nei­ther re­ally tells a mean­ing­ful story about real es­tate and whether you should buy or sell your prop­erty.

The real es­tate mar­ket does not op­er­ate as one ho­moge­nous, sin­gle-minded en­tity. It is, in fact, a col­lec­tion of smaller mar­kets and if you’re try­ing to make a de­ci­sion about whether to buy or sell, look­ing at the na­tional trends won’t help much.

You re­ally need to drill down to a more lo­cal mar­ket and look at data from your im­me­di­ate area.

In Queens­land the real es­tate mar­ket is more com­pli­cated than some of the other states be­cause, un­like the other states, we have such sig­nif­i­cantly-sized regional cen­tres and a de­cen­tralised pop­u­la­tion. Of the 4.7 mil­lion peo­ple who live in Queens­land, only 2 mil­lion live in Bris­bane. More than half live out­side the cap­i­tal city. Com­pare that with New South Wales, where two-thirds of the state’s 7.5 mil­lion peo­ple live in Syd­ney.

So start by look­ing at the me­dian house price trends for your town, and then break it down to your sub­urb. Look at his­tor­i­cal trends and find the cy­cles.

Then read the news­pa­pers and un­der­stand what in­fra­struc­ture spend­ing is planned, what busi­ness lead­ers are say­ing about em­ploy­ment in your town, what ma­jor projects are hap­pen­ing that will bring jobs to the area.

Then find a real es­tate agent who can help you find the neigh­bour­hood that will suit your in­vest­ment or res­i­den­tial needs.

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