SQM Research

A Word From Our MD, Louis Christopher

Following on from last week’s "Throwing Darts at the Data board", please find below the second part to this segment on data lag times and their effect upon readings for the various house price reporters. 

Lets start this week with ACT:

Source: ACT Planning and Land Authority, SQM Research
For the ACT, of the 212 sales records sent through during the month of May, the average lag time was 212 days, meaning that half the records sent throughout May actually represented sales that happened six months prior or even earlier.  No sales records were reported through within 15 days of the exchange date. 

Once again this is an appalling situation and may go some way to explain why RP data reported a boom (3.8% rise) in house prices for the March quarter, whereas at the same time, vendors were slashing each other’s throats - with asking prices falling by 3.8% for the same period, aswell as other data reporters recorded flat to falling house prices over the same time.

Remember, RP Data grab sales that occur from previous time periods to work out a present day index price which never gets revised. In contrast, other property data reporters (rightfully) just report on sales which occurred for the period reported on and revise their previous periodical results with data that has come through since that time.

Now Western Australia:

Source: Western Australia Land Information Authority trading as Landgate, SQM Research

For Western Australia, things are a little bit better. The average lag is 113 days based on based on 11,422 residential property records sent through for the Month of May. There were however, just 109 sales that were sent through within 15 days of the contract date. And of course, none were sent through on the day itself.

South Australia:

Source: The State of South Australia, SQM Research

South Australia is better still with an average lag time of just 59 days. That was based on 3,443 records sent for May. What is impressive is that there were 1,968 properties reported within 15 days of the property exchanging contracts. Funnily enough this has always been the state where the various data reporters have consistently had the highest correlation between each other with regard to the movement in house prices. That is because the data, unlike most other states, is accurate and timely. Note there are still no properties being sent through on the same day as they sold.

Northern Territory:

Source: NT Department of Infrastructure, Planning and Environment, SQM Research

Then finally, the Northern Territory where the lag time is better still at 38 days based on 266 properties sent through for the month.

So there you have it.
In none of the states is there a situation where any sales are coming through on the same day as they sold, rather it is taking a number of months to come through.  In nearly all states, there are a number of records that are literally taking over a year to get through, which generally represent newly constructed dwellings.

We received a lot of public interest last week on this issue and I see some have argued back in some forums that so long as the daily index is consistent then its okay.
But hang on, its’ not Okay.

Besides the moral issue of misleading people, if the daily readings of this index really represent a mix of sales that actually transacted months or even years back, then it is most likely the index will not be able to capture current turning points in the market, which it was supposedly designed to do.

Instead, all it will capture each day are just spasms of various historical market movements mixed in with the current market. No wonder the index recorded rises in Melbourne house prices in early 2012. It was still capturing and reporting on the last of the market upturn in 2010! 

And no wonder the index best matches the ABS data when you lag it by a quarter. E.g the RP Data June quarter results from its daily index best match the March Quarter results from the ABS. Yes that’s right folks, this thing is behind the ABS house price series, not in front.

So for the June quarter, RP Data yesterday recorded a very soft 0.1% increase in house prices for the 8 capital city average. Noted of course they did not run with this number in their headline.
Nevertheless, this was precisely the same soft result for the ABS’s preliminary March Quarter Results.

In the March 2013 Quarter, RP Data recorded a strong 2.9% increase for houses. The ABS also reported a rather strong 1.6% rise for the December 2012 Quarter on their preliminary results. 

In the December 2012 Quarter, RP Data registered a weak housing market with a 1.1% decline for houses in the Quarter. Meanwhile for the September quarter the ABS Registered a rather benign rise of 0.3%

And so it goes on. RP’s September Quarter result was a strong 2.2% while the ABS recorded a 0.5% increase for the June Quarter. Take the net result of those last two readings and you get a net increase of 1.1% increase from RP Data and a 0.8% increase from ABS. Except of course that RP Data lag the results by a quarter. 

The group reported a 1.4% decline for houses in the June Quarter 2012. ABS had a 1.1% decline for the March Quarter 2012.

In each and every quarter, the fit between the ABS and RP data is almost perfect when you presume that RP Data are really reporting for the quarter prior to the one they are actually publishing. So this makes the preliminary ABS house price series a good predictor of the RP Data house price results and the RP data results a good predictor of…nothing. Or at best, just confirmation of what we already knew via the ABS a quarter ago.

So here is my prediction:  Assuming this woeful index is still around next quarter, I predict that whatever the ABS comes out with for the June quarter, that RP’s September quarter result will closely match it!

Vendor Sentiment rises for the June Quarter

Asking prices continued to rise for the month of June and were also up for the June quarter:

Asking prices rose 0.9% for houses for the month and were up by 1.4% for the June quarter. Unit prices rose by 0.3% for the month and 1.5% for the quarter.

Perth recorded the fastest rise for the quarter of 3.7% for houses and 3.2% for units:

While Canberra recorded the steepest decline of 3.7% for houses and 2.3% for units. That is the third straight quarter decline for ACT dwelling asking prices, which makes the chart look dark indeed:

Top Ten Most Discounted Properties Nationwide

This week's top ten features a couple of new editions on the tail end of the list - with the 9th and 10th spots being taken by two Tasmanian properties. Both these homes have been discounted by 33% - meaning their current asking prices now stand at two thirds of their original asking prices. This takes the total of properties in the top ten from Tasmania up to three again, still leaving the state of Queensland in the lead - with five of the ten listings still originating from this northern state. Victoria, South Australia and the Northern Territory continue to be absentees along with our national territory - Canberra. 

Rank Address Suburb Postcode First seen Initial price Now asking Reduction Days on Mkt     Link
1 34 Seraya Court Closeburn 4520 13/08/2011 $1,450,000 $795,000 45% 679     link
2 9 Hughes Street Londonderry 2753 02/10/2010 $2,300,000 $1,290,000 44% 994     link
3 7 Cassidae Crescent Tangalooma 4025 29/03/2009 $1,495,000 $875,000 41% 1546     link
4 4 Edgewater Pl Lamb Island 4184 01/08/2010 $425,000 $249,000 41% 1057     link
5 79 Perulpa Dve Lamb Island 4184 15/08/2010 $499,000 $298,000 40% 1043     link
6 38 Cloverdale Road Doolandella 4077 09/02/2013 $1,650,000 $1,000,000 39% 133     link
7 368 Rheban Road Spring Beach 7190 08/11/2010 $760,000 $500,000 34% 959     link
8 134 Bay Road Berowra Waters 2082 21/08/2010 $1,199,000 $795,000 34% 1036     link
9 124 Sky Farm Road Deep Bay 7112 10/12/2012 $599,000 $400,000 33% 196     link
10 39 Mcdowall Street Middleton 7163 12/02/2012 $295,000 $199,000 33% 496     link

If you are interested in finding potential bargains in your area, check our SQM Research's Home Discounts Report, where we list all the properties in your chosen postcode along with their sales history, that have spent more than 60 days on the market. Click here for more info and a free sample.

Capital City Boom and Bust Reports

SQM Research is now providing a discount to consumers who wish to purchase more than one of our recently released Capital City Boom and Bust Reports. Consumers who purchase two or more of any of the reports will receive a 20% discount off the total purchase price. Woo hoo! If you haven't got your hands on one of these yet and want to know what all the fuss is about -  click here for more info or to purchase a bundle of reports.


Black Dragon's Words for the Week

"An intellectual says a simple thing in a hard way. An artist says a hard thing in a simple way."
~ Charles Bukowski

Rude Real Estate Realities

Ever had to live next door to the neighbours from hell? These feuding renters have caused more than a little melodrama in their local community, with fights escalating to the point of knife threats! Watch the following segment from A Current Affair to see how a nasty argument about parking resulted in one set of tenants requesting a cancellation of their tenancy agreement. Please note, the following clip contains coarse language and bogans -

Parking War

If you ever find yourself for any reason in a similar situation where without fault of your own, you feel that exiting the premises and terminating your lease is a necessity, SQM Research recommends contacting the Rental Tenancy Authority in your state, who should able to guide you through the correct processes to do so without penalty.
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