How can you grasp real estate industry?
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.