The Price of Real Estate: A Comprehensive Look at House Price Indices

Unlike with other goods and services that have a fixed price per unit, each sold property is always priced differently.

Furthermore, there are no transaction prices every month/quarter on the same property. Instead, there are infrequent transactions on diverse properties.

This results in noisy and unreliable data if we chose to rely on simplistic indices such as Median Price.

In this article we explore the solution to this problem and describe the methodologies used.

The Complete Guide to the IRSAD and How it Relates to House Prices

The Index of Relative Socio-Economic Advantage and Disadvantage (IRSAD) is a geographical index published by the Australian Bureau of Statistics that ranks areas in Australia by socio-economic factors.

In this article we explore how IRSAD relates to house prices in Australia.

Explore an interactive map that shows IRSAD decile scores for LGAs in Australia. The higher the score (dark orange), the better off is the area in terms of its’ socio-economic status.

Is Median Price a reliable metric to go by? Short answer is ‘No’!

Median Price is one of the most commonly reported property market metrics. All major media outlets and data providers use it to highlight real estate price levels in capital city and regional markets. In this article we will explore whether this metric is a reliable indicator to perform data-driven market research and assess suburbs for investment opportunities…

Vacancy Rate Metric Explained

Vacancy Rate is the percentage of vacant rental properties in an area reported at the end of quarter period. The lower the rate, the better. Low rates are indicative of under-supplied markets with upward pressure on rents and cash-flow yield. It’s much easier to find tenants in these markets.

Developing Property Investment Strategy during and post COVID-19

This is the third video playlist and blog post in the Over and Above series. In this post we explain all the ins and outs of planning and due diligence commonly performed by successful strategy-minded investors. Summary of the videos below:

Video 1: Maybe you would like to achieve $2000 a week passive income. Or increase your net worth to $4 million dollars. Whatever lifestyle you want to create – you need to define it and work out a plan as to how you’re going to get there. Because by identifying the goal and setting out the roadmap, you will have checkpoints and markers that will allow you to measure your performance – and know what it’s time to pick up the pace, pull in the discretionary spending, or evaluate your portfolio. It is through this ongoing evaluation and critical analysis that you will be able to take a birds eye view of the grand plan – the overall objective – and work with professionals to strategise the right next move to get you closer to the end goal.

Video 2: The common belief that there is going to be a small pool of investors who are going to be snapping up a whole lot of bargains under market value post COVID-19 – I am not so certain. It is my opinion that demand will continue to outweigh supply in markets that are currently experiencing heat. These markets possess strong local economies, multiple employment nodes, strong infrastructure and vacancy rates hovering well under 1%. Remembering the key fundamentals to purchasing property is going to be paramount to remove the temptation of buying the potential “bargain” in a town or city that does not possess the essential growth drivers for long term

Announcing New HtAG® Team Member

We have seen a couple of very good years at HtAG. The organization has experienced substantial growth — we have gone from 200 subscribers in 2018 to an excess of 1,700 this year. There are many new features in the pipeline and we are also looking at expanding internationally, bringing data science to property investors in New Zealand and Asia.

On that note, we are ecstatic to announce that Vedran Maric has been appointed to the role of Head of Finance and will be joining the HtAG board of directors. Mr. Maric has spent the last 11 years with Citibank Australia undertaking a variety of senior roles.

Introducing Key Property Market Metrics

In this video post we introduce you to the key metrics that real estate professionals use when evaluating a property market for “investability”. The 5 videos in the playlist are summarised below.

  1. Understanding the days on market for a local area could be the most powerful piece of data you get your hands on. Firstly, when buying, by understanding this key metric, you are provided an indication of the stability or volatility of a region. If the days on market are high, it can indicate that the demand is low. You will need to do further research to understand why, to be able to make an educated decision as to whether a region is investable from a purchasing perspective.
  1. Vacancy rates should be one of the first factors an investor considers before purchasing in a local area. Vacancy rates will also give you an idea of supply and demand in an area . When vacancy rates are low, you can feel confidence that you property will be tenanted quickly. Target vacancy rates of 3% or lower to reduce the risk of your property being vacant for extended periods and maximise the opportunity for a constant flow of rental income.
  1. As your first property builds up equity, you can leverage the equity in that property to purchase subsequent properties. Capital growth is king and is what will allow you to continue to utilise this strategy – either through capital growth or manufacturing growth or a combination of the two. By leveraging equity, this will allow you to hang onto your cash and still invest in property now, to continue building your portfolio.
  1. There are two types of yield to consider – gross yield and net yield. A gross yield does not take into account any expenses – from repayments, to property managements fees, maintenance, rates or insurance. Your net yield is the yield you achieve after these expenses have been factored in and demonstrates a positive or negative cashflow position. Gross yield is the simplest metric for all investors – but it is absolutely crucial for investors to control the costs associated with their investment to arrive at their net yield position.
  1. Investing in property in regional suburbs throughout Australia can minimise your risk profile and maximise your investment outcomes, along with forming a secure foundation for first time and experienced investors alike, achieved through lower entry costs. These key regional suburbs generally appeal much more to the masses as a more affordable market, which when coupled with growth drivers and fundamentals, can put pressure on property prices and rents, attracting higher yields and potential for capital growth. Careful, professional due diligence should be carried out to understand comparable recent sales in the region, days on market, vacancy rates and rental yields – all critically important, before deciding on a regional area in which to invest.

Intro to Property Investment by a Real Estate Professional

Are you just starting your property investment journey? Or are you a one time investor looking for the next opportune moment? Either way we encourage you to listen to the YouTube playlist created specifically for those aiming to adopt a professional approach to property investment and learn from a team with proven results.

This playlist is a compilation of 4 videos by Over and Above Buyer’s Agents. The playlist is a great introduction into the growth mindset that you will need to acquire in order to achieve and maintain long-term financial success through property investing.

Video 1: The top 2% of investors in this country are spending countless hours getting their strategy together before they even consider looking at properties. They’re lining up their professional property team and having everyone work collectively to build a strategy that suits their personal situation, income, requirements and objectives. Professional investors minimise their risk profile and position themselves to be able to leverage the success of their property portfolio.

Video 2: Not all suburbs are investable suburbs. There are many critical elements to identifying a high performance investable suburb. These include government spending, population growth, employment, low vacancy rates, affordability and projected cashflow – the higher the rental yields, the greater your net cashflow position. By combining these 6 fundamental factors, you’ll position yourself amongst the top 2% of investors who invest backed by data and statistics, rather than emotion.

Video 3: The first reason most investors never reach their full potential is that they purchased the first property with no long term plan. If they have experienced negative gearing, this often paralyses the next step. Or perhaps they have never assessed how their property is truly performing to understand if there is enough equity to leverage into another asset. Planning, strategising and measuring performance are three critical factors most investors skip over and as a result, never reach their full investment potential.

Video 4: More often than we would probably like, life throws a few curve balls at us all – and it makes us question if we’re truly ready or if it’s the right time. It all comes down to mindset. It’s not always going to be the right time. It’s not always going to feel comfortable and it certainly won’t always be convenient. But this is all part of the journey of life and the longer you wait for the perfect time to get started in property investing, you will continue to realise that nothing changes if nothing changes.

Do you have questions or comments? Feel free to post them in the comment section below.

Days on Market (DoM) and Discounting Metrics Explained

Days on Market (DoM) and Discounting are important metrics used by real estate professionals to gauge market demand. Over the last 3 months, our data analysts made good progress integrating additional data sources into our dataset, which enabled us to incorporate these 2 metrics into HtAG reports and dashboards.

Our dev team are now focusing on enabling this feature on the site, targeting an early December deadline. In this post, we are releasing the preliminary Q3 DoM/Discounting report for 3,342 suburbs to the public. The table below summarises these 2 metrics for house, townhouse, unit and land sales in Q3.

Please read till the end to see the top performing market in Australia right now. I also hope you can help me answer the questions in the last paragraph.

Deep Dive into the HtAG Algorithm with The Investor Lab

Did you know that you can outperform other investors by predicting the future of the property market? What if there is a way for you to foresee how it will be doing in the next three or four years? If you are an existing HtAG Subscriber you may already know that as unreal as it sounds, it is possible.

Matt and Sasha had a lot of fun chatting with Goose from the Investor Lab about machine-learning algorithm and how it’s different from AI… What makes the human element essential to this kind of technology… Why there are multiple growth drives that factor in… And lots, lots more!

In this video, we cover:

  1. The origins of Higher than Average Growth [04:49]
  2. The team behind HtAG [09:11]
  3. Using past property market performance data to predict the future [11:41]
  4. Challenges in predicting the property cycle, all variables considered [15:41]
  5. How HtAG measures accuracy [18:15]
  6. AI vs machine-learning algorithms and their roles in property investing [20:09]
  7. The downside of applying technology to property investment [25:21]
  8. The biggest drivers of the growth of an area [30:02]
  9. The future of HtAG [36:16]
  10. Data interpretation still requires a human element [37:45]
  11. The only way to get your answers would be to keep probing [41:15]
  12. To train an algorithm, you have to feed it with a good diet of healthy data [42:40]

Visualising Spill Over Effect and Property Demand Profile

In part 3 of our blog series, we highlighted the benefits of GRC feature. In this post we will provide an overview of the last 2 tabs on the LGA pages. Heatmap tab is a different way of presenting the GRC information in that it permits clients to look for meaningful relationships between areas and find growth clusters in terms of their rate of change. It permits for a bird’s eye view of the council area that not only highlights the geography of growth, so to speak, but also enables customers to ascertain growth corridors within a particular locality that might possess better market fundamentals and thus be of higher investment grade. The red indicates negative YoY growth while green highlights positive YoY growth.

Introduction to Growth Rate Cycles

Determining market fundamentals from ‘behaviour of the curve’ i.e. forecasts from Part 2 in this blog series is not always sufficient. It becomes pertinent only when considered alongside the rate of growth for an area. This information can be obtained from Growth Rate Cycle tab, which we will focus on in this post.

The GRC (Growth Rate Cycle) represents the rate of growth change in median value and is a little different to the ‘property clock’ which has predominantly been used by investment professionals to determine the position of the area in a cycle. The best way to highlight this difference is to explain the philosophy behind the GRC and the property clock cycle notions…

HtAG Platform Overview Video Pt.3

This is the 3rd and final video in the HtAG Platform education series. In this video we cover off:

  • Deep dive into the forecasts graphs
  • Learning how to read the GRC graphs for council and suburbs
  • Learning how to interpret LGA heatmaps & scatter plots
  • Interpreting the Demand Profile Tab
  • Conclusion to the Camden Council case study with 3 suburbs earmarked for investment

If you missed the previous two videos in this series, make sure to watch them before watching this video.

Benchmarking “Investability” of Suburbs within a Council Area

Second post in the 4-part educational series that explains how to use the HtAG platform. The author is using an assumed persona of a DYI investor researching the Camden Council, NSW property market. In this post we deep dive into the use of LGA page ranking table and the forecast graphs.

HtAG Platform Overview Video Pt.2

This is the second part of the HtAG educational video series. We will continue with the example from Part 1 and explain the following:

  • Contextual Interpretation of HtAG data in terms of strategy and personal circumstances
  • Deep dive into GRC (Growth Rate Cycle)
  • Combination of GRC and other metrics for property market assessment
  • LGA page overview
  • Interpreting the forecast graphs for median price & rent

HtAG Platform Overview Video Pt.1

This video introduces property investors & home buyers to the HtAG Analytics platform. We explain how to apply HtAG proprietary set of tools to perform property market research, covering most of the current features available. Every feature will be explained in detail via the screen capture, which is the format of this video series.

This is the first video in the series, in which we explain the following:

  • How to use LGA map of Australia to measure council area capital growth rates
  • LGA/Suburb Ranking table and the use of filters / optional column toggles
  • Confidence levels and their significance
  • Research considerations when using the ranking table (with an example)
  • Introduction to GRC (Growth Rate Cycle)

Can you see into the future and predict real estate market trends?

AI, Machine Learning, Big Data are not only IT industry buzz words but are established technologies with real-life applications. These technologies have already solved several everyday problems in the recent decade. For example, Google Maps gets you from point A to B via an optimal route in peak traffic using Big Data and Machine Learning. … Read more

Introduction to HtAG Property Investment Platform

In this case study, the author assumes the role of a hypothetical DIY investor, who is researching the Camden Council property market. He is interested in investing in this area due to its proximity to his other investments that have performed well in the past. He recently obtained preliminary advice from an investment professional, whose rationale he would like to vet by doing his own due diligence using the HtAG platform.

What is the impact of COVID-19 on the Australian real estate market?

In recent weeks several leading real estate bodies published detailed assessments of the COVID-19 impact on the Australian property market. The consensus is that, although the sales activity has significantly decreased, it is too early to conclude whether the property prices have been impacted. Based on current data, median prices remain steady despite the restrictions imposed on the real estate industry and the general recessional trends in the economy.

In this article, we will take a close look at the latest sales data in major Australian capital cities – Sydney, Melbourne, Brisbane, Adelaide, Perth and Canberra. We will establish the market trends before the spread of the pandemic early in the year and compare them to values reported in March, April and early May. These 3 months signify the introduction and subsequent easing of COVID-19 restrictions throughout the country. Therefore analysis of property market data during this period, will provide us with a valuable insight into the impact of the pandemic on the Australian real estate market…

Buying properties “below market value”?

This notion has always been the gold nugget of property investing. What it essentially means is that one realizes profit or capital gain upon purchasing the property because the value for which it was acquired was less than what the property is ‘actually’ worth.

However, the term is a little obscure because the real or ‘true’ market value of a property is realized upon the sale of that property; essentially we do not know how much a property is worth and what its ‘market value’ is before it is sold.

This means that buying ‘below market value’ is more a matter of opinion than it is a matter of fact—that fact that a property sold for less than it is worth cannot be objectively determined as one has no avenue of knowing and subsequently having a widespread consensus on the plausibility of the two figures (i.e. the actual worth of a property and the selling price).

In response to the above, at HtAG, we offer a little bit of a different take on the buying below market value notion. Firstly, by focusing on real time data used in highlighting investment quality of suburbs, one deals with what has been one of the major issues with the property advisory sector, namely the gaps in the subjective opinion of advisers and the advice given on the back of conflicting interests…

HtAG Feature Plan for 2020 and Beyond

Our mission is to provide pertinent and accurate property investment data easily accessible to everyone irrespective of their property investment experience, professional background, and/or financial backing.

For this reason, we strive to think of innovative ways to present and arrange property data so that it provides more insight to our clients and assists them in making informed investment decisions. We endeavour to highlight a ‘new fond’ meaningfulness in different property data sets that were previously considered as either irrelevant or insignificant (or not significant enough).

To this end, our business modus vivendi is to arrange, organise and present data in different ways not only to highlight the potential of suburbs and LGAs but, more importantly, to provide a more attuned ‘lens’ for perceiving and understanding current and future market dynamics…

Best Tools for Estimating your Home’s Value

The ability to appropriately estimate the value of your home can help you with determining if your investment has appreciated in value. You can use that information to inform your decision on whether to sell now or wait. If you plan to keep the property as a rental, its estimated value can also assist in calculating how much to rent it for.

The HtAG® Service Promise

The need for HtAG arose in response to the complexity of the property investment space as well as barriers to entry for obtaining accurate and valuable information about the property market’s movements. Australian property market is comprised of a plethora of submarkets, each with its own patterns and trajectories sometimes moving to different ‘beats’ and in different directions. Organising information to compare the investment potential of these numerous submarkets is more often than not a lengthy and costly process requiring a team of professionals.