By Guest Blogger, Leanne Pilkington, CEO,
Laing & Simmons and Immediate Past President REINSW
Recent CoreLogic data suggests prices in Sydney declined by 3.3% over the June quarter, but on the ground agents are seeing larger discounts negotiated. Obviously there’s a time lag in the reporting of property trends and the real-world situation, but what does this mean for buyers? Laing+Simmons CEO Leanne Pilkington this month takes a measuring stick to the seemingly endless stream of property data that makes news.
The consistent advice to people considering a property purchase is to do their research. Invariably, this means looking at the data. It’s an important part of due diligence, but data alone can present a dated perspective.
Often, it’s the trend that the data shows that’s more important than the numbers themselves. For instance, Sydney prices have lost some heat after the unprecedented recent boom, but these subdued fluctuations differ significantly across areas and price points.
Seeking to apply a data-fuelled number generated by analysis of a broad sample size can be misleading in the context of an individual property in a specific suburb.
Buyers need to understand that the property market is actually a series of individual markets. Data typically considers the former as a singular. But the trends that data can point to will impact different areas, styles of property and price points in different ways.
Typically, media headlines don’t make this distinction. Data is captured by researchers, fed into models to identify movements and emerging trends, interpreted by experts to provide overarching comments, packaged for media consumption, then reported on by journalists. All the while, agents are having fluid conversations with buyers and vendors on the ground, with the results of those conversations set to influence future data sets.
That’s why it’s so important to qualify data with an agent with expertise at the local level, in real-time. Whether you’re buying or selling, there are agents with specific expertise on both sides of the transaction. Even experts can’t time the market perfectly and often when shifts occur, they do so quickly. Data may hint at these changes, but agents know when they take hold locally.
Vendors usually need to buy another property at the same time as selling their existing one. Buying and selling in the same market can typically offer some comfort: the factors influencing the price you get will also impact the price you pay. Changeover cost is something to be wary of; you don’t want to be selling at the bottom and then trying to buy as prices are escalating.
Waiting for data to reinforce a pre-conceived sell-then-buy strategy can expose this potential pitfall. Likewise, buyers who wait for data to confirm the right time to buy may miss the prime real-time opportunity.
The time lag with data combined with the rapid shifts which can occur in the market may mean that once you’re alerted to an emerging trend, it’s actually already well established on the ground.
At the moment, agents are having to work hard to close a sale. FOMO has left the building, buyers are exercising caution and vendors must ensure their price expectations represent the new reality.
Good prices are still being achieved and buyers are finding value, but some properties are taking longer to sell than they were a year ago. This trend alone reinforces the point that the time lag with data can create a skewed view.
So, while it’s true that research must take into account the headline data, it must also take into account the real-world current situation in the local markets you’re specifically interested in. This means talking to an agent with local expertise.
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