Why you can’t rely on property statistics

Anybody who speaks to me about property trends will know that I am very skeptical about the value of statistics when it comes to the Sydney property market.

The main reason for this is that Sydney is NOT a homogenous market and even within suburbs there is a great deal of variability between properties. At best they can provide a starting point for research, however they are prone to mislead the unwary.

Some examples:
• A few years ago Birchgrove registered a 20% drop in values purely because there were no waterfront sales that year. Non waterfronts definitely increased in value and if these properties were analyzed separately I am sure the actual results would have been closer to showing something like a 12% growth.
• Annandale has recently registered a larger than actual increase in median house price due to an unusually high one-off sale over $5M. We recently had a client who had stopped looking in this suburb because they felt they had been priced out of the suburb due to this rapid “growth” in prices. When we showed them actual sales results they could see that Annandale was actually tracking the same as surrounding suburbs.
• Drummoyne units range in value from around $450K for unrenovated red brick 3 storey walk-ups to over $2M for waterfront eastside apartments with Harbour Bridge views - the rental yields at the lower end are vastly superior to those at the higher end, yet they are all bundled into the same statistics for units. Investors may miss out on great opportunities if they rely on yield statistics for this suburb.
• The Alexandria median unit price showed a large jump about a year ago – driven by the completion of large new apartment complexes, not by actual price increases.
• The median house price for Sydney showed an increase last year which was fuelled by first home buyers. Yet, when you break the figures down, the lower end of the market showed a much greater increase than the upper end of the market. So the impact of the first home buyer influx was far greater at their end of the market than the statistics revealed.

The moral of this story? Research into the property market requires much more than devouring statistics and buying suburb reports. You need to understand the individual dynamics of each suburb and area if you are to be confident in making a wise purchase.

For more information on buying property in Sydney go to www.gooddeeds.com.au.

Some helpful statistics.

We are always being asked what are the best suburbs to buy in. If you are buying for investment you usually need a combination of yield and capital growth (not taking into account depreciation and other aspects). Recently we compiled this list of top investment suburbs from the Australian Property Monitors database.

Units - we reviewed all Sydney suburbs within a rough 15km radius of the CBD and selected all those with a rental yield of 5% or more and a 3 year average positive capital growth rate of 5% and above. 17 suburbs fulfilled this criteria and a further 12 had yields over 5% and a 3 year average positive capital growth rate of under 5%.

Here are the top 5: Chippendale, Alexandria, Kogarah, Arncliffe, Waterloo

Houses – we reviewed all Sydney suburbs within a rough 10km radius of the CBD and selected all those with a rental yield of 4% or more and a 3 year average positive capital growth rate of over 5%. Note – there are no suburbs within 10-15km radius of the CBD that have this combination of yield and cap growth. 16 suburbs fulfilled this criteria.

Here are the top 5: Chippendale, Alexandria, Lane Cove North, Darlington, Camperdown

If you'd like to see the yields and growth stats for these suburbs, contact me through http://www.gooddeeds.com.au/