With property prices reaching higher than normal levels, valuation metrics and sales performance have hit the spotlight for providing inaccurate projections of property prices.
This is to be expected with the significant and unexpected market activity in the last year, according to property data analyst Kent Lardner.
Mr Lardner analyses data for companies such as JLL, CoreLogic and Genworth 500.
“Typically, what we do is we try and find comparable sales that are within 6 months old, but you’ve got a really interesting situation where a lot of regions have had a really big surge in price,” he said.
For example, in Beenleigh, Browns Plains, Jimboomba, and Springwood, Mr Lardner said the average increase across those markets is 3 per cent.
“So if I pick any comparable sale older than three months old, instantly it’s going to be out by that much or more,” he said.
This has happened because sales from months ago no longer show an accurate picture of what the market is like.
“In the rapidly rising market we’ve got, the older the comparable sales are when I’m doing an appraisal now, the more inaccurate it will be as well,” he said.
He said some agents have been caught off guard as a result.
“A lot of these regional real estate agents have just been caught, there’s no way they can anticipate that crazy leap.”
Instead of relying only on comparable sales, he said agents should look ahead two or three months, predict what the growth will be, and add or subtract it from the appraisal, depending on what the market is doing.
“That would be the better way to do it, no doubt,” he said.
Brayden Currey is a buyer’s agent specialising in Logan, Ipswich, and Toowoomba.
He calls himself a “data second guy” who prefers to look at what the market is doing now before drawing upon comparable sales.
“In a booming market, the valuations will take time to catch up to what the market is paying, so that can be a bit tricky when the data doesn’t add up from however many months ago,” he said.
In the major metropolitan areas, he does not see the market activity exceeding current levels. That means comparative buying will eventually start being more reliable.
“I think that ripple effect of seeing all the areas that were really going to jump have made their jump, and then we’ll start to see comparative buying have a better run longer term,” he said.
The exception to that are areas that are still developing.
“The other thing is with Logan, a lot of new builds skews a lot of the data,” he said.
“There’s a big demographic looking for land.”
