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While property price data can help you pin point possible target suburbs, your research needs to include a lot more leg work.
Property data gives you a good gauge on how the median property price is tracking in a particular area; investor and home buyers should use it as an indicator only.
A lot of investors and home buyers are confused by property data – in particular what the median price actually means and how to use that information, and fluctuations to the median, to understand market dynamics.
The median is the middle of a series of numbers where one half of the group is higher and one half is lower of the median. The median and the average for the same data series can be very different.
In the context of property sales, if there were 21 sales in a suburb, for example, ranged from lowest to highest, the median price would be the eleventh in the list.
Property buyers can use the median price to help identify those suburbs with property prices that fit their borrowing capabilities and budgets.
However, the median should only ever be used as a guide and is not necessarily representative of individual properties within an area. Why? If there have been a number of sales, for example, grouped within a small band of say $20,000 in a new lower-value unit development, this will affect the overall median price of a suburb.
Remember, the median price does not distinguish between the number of bedrooms, the style of properties (i.e. brick or fibro) sold and also the price fluctuations within individual suburbs – which can vary considerably.
Success in buying an investment property, a first home or upgrading to a new home comes down to thorough planning and research. And then more research – regardless of whether you’re an investor or owner occupier.
Use property data as an initial research tool; you can then build an intimate understanding of that suburb. Remember, property data is useful, but it doesn’t necessarily reflect what’s happening in your market right now.
The real research work is undertaken in the field – scouring the property pages and internet listings for target properties and then putting in the legwork.
There is no substitute for viewing properties, talking to agents, and unfortunately, getting knocked back on offers. There’s no magic number of properties that you should see before you buy, but the more you view the better idea you’ll build of current market value.