sample - residex...to do this, the residex research team have: collected anecdotal information from...
TRANSCRIPT
SAMPLE
This Report is created by Residex Pty Ltd, ACN 003 000 119, Level 21, 2 Market Street, Sydney NSW 2000
The Parties* making this report available to you give no warranty nor accept any liability for any decision based wholly or in part on this
report, such as any decision to invest in, to buy or not buy property described herein. The Parties believe the statements, information,
calculations, data and graphs contained herein to be correct and not misleading but give no warranty in relation thereto and expressly
disclaim any liability for any loss or damage which may arise from any person acting or deciding not to act partly or wholly on the basis
of any such statements, information, recommendations, calculations, data or graphs.
Residex is subject to Privacy Legislation, including the National Privacy Principles ("NPPs") under the Privacy Act 1988 (Cth), The
Privacy and Personal Information Protection Act (1988) and contractual requirements relating to Privacy pursuant to a number of State
and Territory Government Licence Agreements.
Material published in this report is protected by the same laws of copyright which apply to books, videos and music. The right to 'copy'
always remains with the owner of the material. Unless expressly stated otherwise, you are not permitted to copy, republish or alter
anything you find in this report without the express permission of The Parties. By using this report you are have agreed to the terms
above.
* "Parties" means Residex Pty Ltd, their customers and clients, and the customers and clients representatives.
Residex is now owned by CoreLogic, Australia’s largest provider of property data and analytics.
This report uses data for the quarter ending July 2015
NSW Data:
Residex Pty Ltd is authorised as a Property Sales Information provider by the Department of Finance and Services, Land and Property
Information. The information provided in this report contains property sales information provided under licence from the Department of
Finance and Services, Land and Property Information. Issue date: 4-9-2015
ACT Data:
Information provided for the Australian Capital Territory properties has been developed in part by using some property information
(Territory Data) provided under licence by the Government of the ACT. Copyright in any of the sales information used belongs to the
Government of the ACT and while every effort is made in its compilation, the Government of the ACT does not accept any
responsibility for the accuracy or completeness of the information or its suitability for any purpose.
The Territory Data is the property of the Australian Capital Territory. No part of it may in any form or by any means (electronic,
mechanical, or micro copying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without
prior written permission.
Enquiries should be directed to: Director Customer Services ACT Planning and Land Authority GPO Box 1908 CANBERRA ACT 2601
VIC Data:
To the extent that this report has been developed using information owned by the State of Victoria, the State of Victoria owns the
copyright in the Property Sales Data which constitutes the basis of this report and reproduction of that data in any way without the
consent of the State of Victoria will constitute a breach of the Copyright Act 1968 (Cth). The State of Victoria does not warrant the
accuracy or completeness of the information contained in this report and any person using or relying upon such information does so on
the basis that the State of Victoria accepts no responsibility or liability whatsoever for any errors, faults, defects or omissions in the
information supplied.
QLD Data:
Information provided for Queensland properties has been developed in part by using some property information provided under licence
from the State of Queensland (Department of Environment and Natural Resources Management). In consideration of the State
permitting use of this data you acknowledge and agree that the State gives no warranty in relation to the data (including accuracy,
reliability, completeness, currency or suitability) and accepts no liability (including without limitation, liability in negligence) for any loss,
damage or costs (incurred consequential damage) relation to any use of the data. Data must not be used for direct marketing or be
used in breach of the privacy laws.
SA Data:
Information provided for South Australian properties has been developed in part by using some property information provided under
licence. Residex is required to make the following statements with respect to any information that is in turn provided to you by this
website:
WARNING: The information contained in this dataset is extracted from records of land status and cadastral boundary definition held by
the Government of the State of South Australia (the 'State'). The information is not represented to be accurate, current, complete, or
suitable for any purpose, at the time of its supply by the State, and may have changed since the date of supply by the State. The
software by which the information is provided is not represented to be error free. No responsibility is accepted by the State for any
reliance placed by any person upon the information, or the software by which it is provided. Persons acquiring or using the information
and its associated software must exercise their independent judgement in doing so.
COPYRIGHT: Copyright in the information remains with the Crown in right of the State of South Australia. The information is reproduced
under licence from the Crown.
PRIVACY: The information contained in this dataset must not be used for the purposes of compiling contact lists, whether personalised
or not.
WA Data:
Information provided for Western Australian properties has been developed in part by using some property information provided under
licence from the Western Australian Land Information Authority (Landgate).
COPYRIGHT
Copyright in all Landgate information and products (including data, pages, documents, maps, online graphics, images, web pages, audio
and video) is vested in Landgate and is protected by the Copyright Act 1968. Apart from any use as permitted under the fair dealing
provisions of the Copyright Act 1968, all other rights are reserved, and no information and products or part thereof may be reproduced
by any process, distributed, commercialised or reused for any other purpose without the prior written permission of Landgate.
DISCLAIMER
This Information is made available on the understanding that Landgate is not rendering professional advice. While Landgate and has
made every effort to ensure the accuracy, reliability, completeness and suitability for purpose of the information presented, Landgate
does not give any guarantee or take any responsibility or accept any liability (including without limitation, liability in negligence) arising
from or connected to any errors or omissions. Landgate accepts no responsibility and disclaims all liability for any losses, damages or
costs as a result of the use or reliance on the information. Reliance should only be placed on the original source documents held at
Landgate. It is strongly recommended that users exercise their own skill and care with respect to the use of the information, and before
relying on the information that users should carefully consider its relevance to their purpose and obtain any professional advice
appropriate to their particular circumstances. The Information may be subject to privacy legislation and contractual restrictions and must
not be used for direct marketing of goods and services or be released to any person or third party for the purpose of direct marketing of
goods and services. Landgate takes no responsibility for any breaches of privacy legislation by any person in relation to the information.
TAS Data:
Information provided for Tasmanian properties has been developed in part by using some property information provided under licence
by the Real Estate Institute of Tasmania. Copyright in the sales information used to undertake the statistical calculations belongs to the
Real Estate Institute of Tasmania on behalf of its members and while every effort is made in its compilation, the institute does not accept
any responsibility for the accuracy or completeness of the information or its suitability for any purpose.
NT Data:
Information provided for the Northern Territory properties has been developed in part by using some property information provided under
licence by the Department of Infrastructure, Planning and Environment of the Northern Territory. Copyright in any of the sales information
used to undertake the statistical calculations belongs to the Department of Infrastructure, Planning and Environment of the Northern
Territory and while every effort is made in its compilation, the Department does not accept any responsibility for the accuracy or
completeness of the information or its suitability for any purpose.
Copyright © 2015
www.residex.com.au ©2015 Page | 1
ABOUT THIS REPORT 3
DARWIN AT A GLANCE 9
CANBERRA AT A GLANCE 15
SYDNEY AT A GLANCE 27
MELBOURNE AT A GLANCE 39
BRISBANE AT A GLANCE 51
Contents
Page | 2 ©2015 www.residex.com.au
ADELAIDE AT A GLANCE 91
PERTH AT A GLANCE 127
HOBART AT A GLANCE 131
ABOUT RESIDEX 136
HOW TO USE THIS REPORT 137
WHERE RESIDEX GETS ITS FIGURES 138
RESIDEX PRODUCT RANGE 140
ORDER FORM 142
www.residex.com.au ©2015 Page | 3
Residex believes that the best guide to the future is the past. The past is the only guide we have and
without it, suburbs may as well be randomly selected from across Australia.
Residex research shows that a process of selection based on past population behaviours is a good
predictive process. The total population is always involved in housing one way or another and people
seem to react to events similarly in different time periods.
Residex statisticians have:
Built and maintained the most comprehensive residential property database in Australia,
collecting and analysing sales results for every property in Australia.
Developed unique forecasting methodologies that identify patterns in each suburb's housing
history and show how these patterns are likely to act in the future.
Built predictive models that tell us where historical patterns will play out and when this is likely to
occur.
This Report combines methodologies and models with Australia wide housing data to identify suburbs
and towns that contain opportunities for achieving a total return greater than 8 per cent, where statistical
models show there is a reasonable chance of good future capital growth of at least 3 per cent per annum
on average over the next eight years plus a current rental yield of 5 per cent or more.
To do this, the Residex research team have:
Collected anecdotal information from real estate agents actively selling in each area.
Talked to property managers about local rents and vacancy periods.
Contacted local government bodies and other authorities, organisations and associations with
an interest in or knowledge of the housing market and its potential future in each locality.
Selected only those suburbs with the lowest risk and highest potential return that have good
anecdotal evidence supporting our statistical forecasts.
It is important to remember that there is always a degree of risk involved with investing in property hence
there is risk associated with investing in any of the areas detailed in this Report. In order to minimise the
risk involved, it is important to understand how the numbers in this Report are calculated, how to interpret
them and the limitations involved in all the methods used. To do this, it is strongly recommend that you
read the various sections of this Report very carefully to gain an understanding and received the full
benefits of this Report.
Wishing you successful investing,
The Residex Research Team
We welcome your suggestions or enquiries. Please email them to [email protected].
About this Report
Page | 4 ©2015 www.residex.com.au
1. How are the suburbs selected for this Report?
There are around 8,300 suburbs and towns with houses in Australia and another 3,800 containing units,
making well over 12,000 in total. The initial task was to reduce these to a list of areas that have a total
return of greater than 8% per annum.
Then, suburbs were subject to further filtering based on affordability and historical growth. Suburbs where
there were few or no property sales in the last year were culled followed by removing suburbs that had a
critically low number of rental properties, which would be of little value to investors.
Lastly, anecdotal information from real estate agents actively marketing and providing property
management services for residential properties in each area was collected to identify the current state of
the market, including rental yields, house price growth, available stock, turnover, typical vacancy periods
between rentals, typical rents and property prices.
Researchers also contacted local government bodies and other authorities, organisations and
associations with an interest in or knowledge of the housing market, the local economy and its potential
future in each locality. They were asked what factors were driving up rental yields and growth, or what is
likely to have an impact on future yields and residential property sales. Any factor that may have an
adverse effect on the growth predictions and increase the risk to investors was also questioned.
What were left are the suburbs that feature in this report, which have the lowest risk ratings coupled with
the highest expected return.
2. What do the figures mean in the suburb summary?
3. Important facts
It is important to remember that units and houses do not perform equally. If a suburb is recommended for
houses then don’t assume an investment in units in that suburb will be an equally good bet. Historically,
there have been very few suburbs where both houses and units meet the selection criteria for this report.
The prediction process is based on past data, that is, past sales. Hence, no prediction in this publication
is recommending a purchase of a brand new property. Each and every prediction is made with respect to
the future growth of an existing property that has been sold at least once before and purchased at a price
in line with its true market value.
In other words, Residex is definitely not recommending purchasing a property in a new large block of units
unless you have confidence in the price you are being asked to pay. It is extremely difficult to correctly
price such properties in this market and hence it is recommended that they are not purchased if capital
growth is the prime objective.
Number of Sales
Residex Median Value
Residex Median Rent
The rental yield in the suburb
Average Annual Capital Growth Predictions
How many times the median
annual income in the suburb
is needed to purchase the
median home or unit in the
suburb
www.residex.com.au ©2015 Page | 5
There is a key message in the above: it is not possible to achieve predicted returns if the purchase price
paid for a property is higher than its market value. If you pay too much you are effectively giving the seller
some of the proceeds you should be receiving when you sell the property. An excellent guide to
establishing the worth of a property is by purchasing our Comparative Market Analysis Report.
This is a market for the investor with available funds as there are sellers who are frightened and
uninformed. Your negotiating skills have the capacity to make you the winner in this market.
4. How do I use this data?
It is strongly recommend that in whatever area you decide to consider for investment, and particularly
when you are selecting a regional area, that you do your homework and consider such things as:
Financial Trends Are interest rates likely to rise or fall, and if they rise, will this slow the growth
rate of your selected area and will your level of proposed debt be serviceable into the future?
The Economy What is driving the local economy? Are there new primary (e.g. mining, agriculture),
secondary (e.g. industrial, construction) or tertiary (e.g. education, tourism) projects underway or in the
pipeline?
The Population What is the population composition and growth rate, local employment prospects and
what are the implications for the housing market?
The Housing Market Establish for yourself the current number of listings and sales in your chosen
suburb or town. This information is readily available from www.onthehouse.com.au including an
independent price estimate for every listed property, powered by Residex’s patented technology.
For many places, you will need to wait and maintain vigilance for purchase opportunities. Given the
increasing scarcity of well-located quality yielding properties, it will be the vigilant and considered investor
who succeeds. Talk to the local council. They will be able to tell you the name of the local paper and whom
you should contact to get a copy. They also may have a local publication that will help you understand the
potential or lack of it in the area. Talk to local real estate agents, and register to receive notification as
soon as properties in your selected areas and price range come on the market.
Finally, don’t forget to check out the areas surrounding your selected suburb as often these surrounding
areas will also present the required opportunity.
5. What is the median value?
In this Report, the “median value” for an area is provided rather than the median sale price. Some
confusion has arisen over these two figures. What is the difference?
Residex has calculated a statistical value for every property in a suburb and it is the median of these
values that is used because it takes into account all of the properties in an area, not just the ones that
have recently sold.
6. How is rent affordability calculated?
The median weekly household income for each suburb comes from the 2011 ABS Census. This figure is
indexed each quarter as the updated ABS Australia Weekly Earnings (AWE) Index becomes available.
The after tax affordability percentage to make rent repayments is calculated assuming a tax rate of 17.5%
and uses the Residex median rental figure.
i.e. Median Weekly Rent / (Median Weekly Household Income – 17.5%)
Page | 6 ©2015 www.residex.com.au
7. Why is the agent’s typical sale price sometimes
higher or lower than our median value?
In suburbs where more sales are occurring at the higher end of the price spectrum, the agent’s typical
sale price may well exceed the Residex median value and the reverse can be true if sales are occurring
at the lower end of the market. By providing both figures, you can see the “true” median value and use
this information in your research.
8. Disclaimer:
Residex has developed this report for the general public. Neither Residex Pty Limited nor any of its
employees gives any warranties nor accepts any liability for any decision with respect to investment or
non-investment, sale or purchase of residential property that is made as a consequence of the use of this
report. Residex Pty Ltd believes the statements, information, recommendations, calculations, data and
graphs contained herein to be correct and not misleading but give no warranty in relation thereto and
expressly disclaims any liability for any loss or damage which may arise from any person acting or deciding
not to act partly or wholly on the basis of any such statements, information, recommendations,
calculations, data or graphs.
9. Copyright:
You are entitled to hold a single copy of this report, which has been provided to you directly from Residex
Pty Ltd. You are not entitled to make copies of the report or extract data from this report and use it in
publications that you produce. If you are considering using this report beyond personal use in any way or
form, please seek guidance from Residex. Please note that Residex Pty Ltd will take legal action against
any party that wrongly uses the data it provides.
www.residex.com.au ©2015 Page | 7
Acknowledgements:
The use of statistical information from the following publications is acknowledged:
Australian Bureau of Statistics
3101.0 Australian Demographic Statistics
8750.0 Dwelling Unit Commencements
8731.0 Building Approvals Australia
6202.0 Labour Force Australia
1301.0 Year Book Australia
5609.0 Housing Finance Australia
5671.0 Lending Finance Australia
8501.0 Retail Trade Trends Australia
Other Acknowledgements
NSW Government – Metropolitan Strategy Plan for Sydney’s Future
Victorian Government – A Plan for Melbourne’s Growth Areas
Queensland Government - SE QLD Infrastructure Plan and Program
South Australian Government – South Australia’s Strategic Plan
Tasmanian Government – Launceston City Council Strategic Plan
ACT Government – The Canberra Plan, Towards Our Second Century
WA Government – Perth 2029 – Four Year Strategic Plan
Housing Industry Association – State and National Outlooks
Economics ANZ - Economic Outlooks
National Australia Bank State Economic Updates
Bureau of Meteorology - Rainfall Deficiencies and Temperature Anomalies
Dept. of Immigration and Citizenship – Immigration Updates
ABARE Australian Commodity Statistics
National Housing Supply Council State of Supply Reports
www.residex.com.au ©2015 Page | 9
Darwin at a Glance
Houses and Units Combined
The median value of Darwin properties as at 31/07/2015 was $507,000
The overall rate of growth for Darwin property was -1.41%
Darwin Houses
There were 1,326 house sales in Darwin
during the last year.
Capital growth in the Darwin housing
market over the last year was -2.85% and
the Darwin median house value is now
$561,500.
The Darwin house median rental yield is
5.40% p.a. and the median weekly rent is
$580.
Current Quarter Future Predictions
Median Value: $561,500 Capital Growth: 0.71% 4% p.a. next 5 yrs
Number of sales: 336 Rental yield: 5.40% p.a. 4% p.a. next 8 yrs
Median rent: $580/wk Total return: 2.09%
Darwin Units
There were 557 unit sales in Darwin during
the last year.
Capital growth in the Darwin unit market
over the last year was -6.41% and the
Darwin median unit value is now $404,500.
The Darwin unit median rental yield is
5.80% p.a. and the median weekly rent is
$450.
Current Quarter Future Predictions
Median Value: $404,500 Capital Growth: -3.31% 2% p.a. next 5 yrs
Number of sales: 119 Rental yield: 5.80% p.a. 3% p.a. next 8 yrs
Median rent: $450/wk Total return: -1.84%
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Median Value - Darwin Houses
Median Value - Darwin Houses
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Median Value - Darwin Units
Median Value - Darwin Units
SAMPLE
Page | 10 ©2015 www.residex.com.au
Stuart Park Units (0820)
Sale Count Last 3 Months 12
Median Value $468,000
Median Rent $515
Median Rental Yield 5.76% p.a.
8 Year Growth Predictions 3% p.a.
Affordability Factor 4.82
Location
Stuart Park is a suburb of Darwin, located approximately 2.5 km north of the Darwin CBD. Stuart Park is
surrounded by the inner suburbs of The Garden, Fannie Bay, Ludmilla and Parap.
Description
Predominantly a residential suburb, Stuart Park is an inner suburb of the city of Darwin. Stuart Park is a
suburb that is rich in history. Residential properties within the suburb are diverse, many of which have
beautiful, waterside views, and the majority of which consist of two to three bedroom units, and three to
four bedroom double storey houses. Units in Stuart Park come in a range of ages and styles. Despite the
relatively small size of Darwin when compared to other major cities in Australia, units are sought after in
Stuart Park because they provide an ideal location between the sea and the city.
Stuart Park is seeing new developments in housing, with the Northern Territory Planning Commission
developing area plans for Darwin’s inner suburbs. These developments will be expanding over a period
of short-term and long-term plans, detailing changes from 10 to 50 years in the future. Development will
encompass housing, traffic and infrastructure developments for the suburb of Stuart Park and its
neighbouring suburbs, according to local news sources.
Facilities
Stuart Park is home to several retail outlets, including food, fashion, and boat stores, as well as
supermarkets. The suburb is also home to several health-care facilities.
Adjacent to Stuart Park is the suburb The Garden, home to the George Brown Darwin Botanical Gardens,
Mindil Beach Reserve, and Cullen Bay. The Garden also contains several other facilities including the
Museum and Art Gallery of the Northern Territory, the Tactile Arts Gallery and Studios and the Darwin
Amphitheatre.
Stuart Park is a great area for young families to settle, with a day care centre and a primary school located
in the north of the suburb. Home to two local parks and a cricket oval, residents can also enjoy outdoor
leisure benefits of Stuart Park.
Industry and Employment
Stuart Park residents are exposed to an abundance of employment opportunities with the Darwin CBD
located close by, and local industries in surrounding suburbs providing employment. The tourism industry
employs many residents in the nearby areas, with several motels, hotels, and resorts within and encircling
Stuart Park, in the suburbs of Darwin, The Garden and Parap.
SAMPLE
www.residex.com.au ©2015 Page | 11
The Northern Territory Development Consent Authority has received several proposals for construction projects in Darwin. These proposals include the construction of a $100 million hotel at Stuart Park, and a $96 million six-storey high motel on Stuart Highway, comprised of 62 rooms. In this proposal, Northern Planning Consultants principal Brad Cunningham claimed there is an increasing demand in the area for accommodation that had not been previously met.
With the numerous proposals awaiting development, many residents of Stuart Park will find employment
opportunities in the construction sector, in trade and technical work, as labourers, machinery operators,
managers and administrators. The new developments in Stuart Park will also accommodate for tourists
and visitors, as well as population growth.
According to the Australian Census of 2011, residents of Stuart Park are mainly employed as
professionals, clerical staff and administrative workers. This is due to the numerous medical and health
clinics nearby, as well as the many government offices and council departments in Stuart Park and Darwin.
Population and Income
At the time of the 2011 Census there were 3,749 residents in Stuart Park, which is a 7.33% increase from
the previous Census. The median age of the people in the suburb was 32 years old and the predominant
age group was 25 to 29 year olds, which accounted for 15.66% of the population. Children aged 0 to 14
years old made up 12.43% of the population while 6.16% was aged 65 years and older. There were 850
families in Stuart Park with an average of 1.7 children per family. Of the families, 33.53% were couple
families with children, 52.12% were couple families without children and 11.06% were one parent families.
The weekly household income in Stuart Park is $1,866. It currently takes around 33.45% of after tax
income to make rent payments on the median rental property.
Housing Market
At the time of the 2011 Census, there were 1,632 dwellings in Stuart Park, of which approximately 46.88%
were houses and 54.50% of all dwellings were rented. Today, Residex calculates that there are
approximately 2,533 dwellings in the suburb. According to local agent, Jan Hallagan from First National
O’Donoghues (0403 246 256), rental vacancy is approximately 4 weeks. According to Matt Englund of
Ray White Darwin (0417 866 821) the typical weekly rent is around $480 to $520, with usual purchase
prices around $460,000. Based on these figures the rental yield is approximately 5.67%. The historical
long term 10 year growth rate was 5.77% p.a.
Rental Yield & Median Rents Last 5 Years
Rolling Yearly Capital Growth & Median Values Last 5 Years
SAMPLE
Page | 136 ©2015 www.residex.com.au
Residex Pty Limited was founded in 1990, by John Edwards. Its founding goal was to understand
residential property markets and inform the public and professionals. It was the first company of its kind
in Australia to analyse the residential property market. It is dedicated to providing quality information on
the real estate market to governments, financial institutions, valuers, real estate agents, accountants,
solicitors and individuals.
Residex collects data from all State and Territory Government Departments and compiles it into a unique
database. Representations by Government Departments mean it is believed that Residex has nearly every
New South Wales sale record since 1978 and every Queensland sale record since 1990. Prior to this time,
Residex has significant sample data going as far back as 1901. The unique Residex database cannot be
matched by any public or private organisation in terms of accessible historical data.
Residex provides information on all aspects of the real estate market, not just relating to price. Rental
yield data, growth in prices, analysis of market movements, mortgage design, financial transaction
structuring, raising and placing of funding facilities, loan risk profiles, statistical consulting and research
are all available.
The company is a consultant and adviser to State and Federal Governments on housing related issues
including the development of financial instruments to provide funding for housing needs.
Residex is the only company in Australia to have won international actuarial recognition for its work in the
development of a definitive measure of capital growth in the Melbourne Residential Markets.
Residex is now owned by CoreLogic, Australia’s largest provider of property data and analytics.
About Residex
SAMPLE
www.residex.com.au ©2015 Page | 137
Dataset What is it? What does it tell you?
Median Value
Every quarter, Residex calculates a value for every property in its database. The middle value is found (i.e. middle number when all the values are arranged in order), which is the median value.
The median value tells you straight away what a typical house is worth in an area. By knowing the cost of a typical property in the area, you can tell fairly quickly which areas you can realistically afford to invest in.
Number of Sales
The number of sales figure is the number of sales we receive over a time period from the government after we have taken out any sales that are too high or too low to be useful. In areas where we have not yet received all that quarter’s sales from the Government, we have published an approximate number of sales.
If there is a high number of sales in an area, this tells you: a) That the area is fairly busy and seesa lot of sales activityb) How confident you can be in theResidex figures, because the moresales we have, the more data has beenused to calculate growth, medians andother data.
Median Rent The median rent is calculated from various sources of weekly rental information such as newspapers and the internet.
The median rent tells you the typical amount of rent per week you can expect to earn in an area.
Capital Growth
The capital growth is the growth in house prices over a period of time. It is sometimes quoted for the latest quarter, and sometimes the average is given for the last 10 years.
The capital growth is the amount by which your investment grows in value. By following the growth in an area, you can find out what your property should be worth or how an area is performing.
Rental Yield
The rental yield is the amount of rent you can expect to receive in a year, expressed as a percentage of a property’s value. Unlike capital growth and total return, which are quarterly figures, rental yield is an annual figure. Note: Users should exercise caution when evaluating very high or very low long-term average yields.
The rental yield gives you an idea of how much rental income you can make in an area. For example, if an area has 5% rental yield and a property in that area is worth $500,000, then you should be able to make $25,000 ($500,000 x 5%) worth of rent in a year or approximately $480 a week.
Total Return A combination of both capital growth and rental income.
If you have been renting out your investment property, the total return figure tells you what your return is from both the growth in house price plus the cash flow from the rental.
Median Income
Median Income is based on the median household income figure for the specified suburb at the time of the last Census. This is updated each quarter with the latest Average Weekly Earnings (AWE) index.
Median income allows you to measure affordability in the suburb.
Affordability Factor How many times the median annual income in the suburb is needed to purchase the median home (or unit) in the suburb.
Affordability of properties in the suburb allows you to determine the purchasing power of residents in an area.
Rental Affordability
The percentage of after tax income used to make rent repayments. This is calculated based on the median rent rate and the median income of the suburb.
Rental affordability helps investors to determine rents for a property, based on the income capacity of potential tenants in a suburb.
How to use this Report
SAMPLE
Page | 138 ©2015 www.residex.com.au
Residex has an extensive and ever-growing database of sales information on the Australian property market. Every month, we receive sales information from various state government sources and our statisticians put the data through a detailed process of cleaning, sorting and analysing before it is released in reports such as this one.
What makes Residex figures unique is our approach to calculating property price growth (or capital growth) and then predicting that capital growth into the future.
The Non-Revisionary Total Market Methodology and
Residex Dwelling Price Trading Indexes
Residex first developed the Repeat Sale methodology of index calculation in the early 1990s. Previously, the only way to measure how an area (such as a suburb, postcode or region) had grown was to look at the raw median sale price of all the properties that had sold in one time period and then compare them with the median price of the properties that sold in the next time period.
The problem with this is that if cheaper properties sold in the first time period and more expensive properties sold in the second time period, you would be comparing a low median price in the first period with a high median price in the next period. While this was adequate for a rough guide, if you were trying to estimate how your property had grown over that time period, you could easily make a mistake.
At the time, there was no adequate measure in existing statistics to cover this situation, so Residex developed its own.
We realised that the problems were caused by comparing one group of houses in one time period with another group of houses in another time period. Wouldn’t it be better to see how each house individually had grown over time? When a property is sold for the first time, we would record the sale price and then when it sold a second time (a repeat sale), we could see how the property had grown over that time period. These two sales for the one property are called a ‘sale pair’.
Residex statisticians took sale pairs for every property where we had at least two sales recorded. So for a large number of properties, we were able to tell exactly how each property had grown over the time period. We then combined these individual property growth rates into a complete growth rate for the area we were looking at. (See the pictures beside for an explanation of how this is done.) This special method developed by Residex gave such outstanding results that we even won an international actuarial award for it.
So far, we have just been discussing the Repeat Sale methodology. Its weakness, like the use of raw median sale prices, is that the figures are subject to constant revision as new data is collected, and it doesn’t cover the entire market. The Median Sale price covers only the portion of the market that sold and the Repeat Sales methodology covers the second-hand market, that is, the portion of the market that has sold at least twice before. While the latter is a huge improvement, coverage of the complete market is preferred. This is exactly what the Residex Dwelling Price Trading Indexes do, as well as being non-revisionary.
The Dwelling Price Trading Indexes were developed late 2005 and are still based around the basic Repeat Sales method, but with additional features that make them more robust and reliable.
As well as considering only the properties that have sold at least twice, we also include new sales in the calculation of the indexes, so they truly cover the entire market. In addition, the indexes are non-revisionary, which means that they never change. The figure that we first come up with is the definitive one for the particular area, time period and dwelling type.
Where Residex gets its Figures
SAMPLE
www.residex.com.au ©2015 Page | 139
The non-revisionary total market Residex Dwelling Price Trading Indexes are available for houses and units in the Residex Index Report. The Report is available for a specified suburb, postcode, Residex
Region, Local Government Area or State. Each Report is valued at $95 and is available at http://www.residex.com.au/index-report.
The Residex Prediction Model
The Residex prediction methodology is also unique. How did we work out what the market is likely to do over the next 5 or 8 years?
We started by gathering a lot of information. The Residex statisticians used Melbourne as a good base model and collected information going back to 1901 to analyse how Melbourne had performed over a long time period including the Great Depression, two World Wars, and many other events that could have had a bearing on the housing market. From this century-long series, it became clear that, no matter what was going on in the world, the Australian property market moves in noticeable trends and cycles.
Residex then investigated lots of different factors to see what their bearing was on the property market: interest rates, inflation, employment levels, population, bank bill rates, etc. By combining the results of these studies with our understanding of past trends and history, we were able to develop the Residex predictions.
We are constantly refining our predictions to increase their accuracy. For many years, they have proved to be very good indicators of the property market.
SAMPLE
Page | 140 ©2015 www.residex.com.au
State Market Reports $90
This quarterly Report is available for each state and territory. It includes key data such as median values, number of sales, capital growth and rental returns at a suburb level for the selected state/territory, along with easy to read tables and graphs. Complete with expert advice and commentary, this Report is designed to make you an expert in property.
Annual Subscriptions are available, which include quarterly Reports and an exclusive Annual Supplement.
Best Growth Predictions Reports from $155
Predictions Reports detail the suburbs that Residex predict to be amongst the highest capital growth performers over the next 5 and 8 years.
Top Predictions Reports select the most likely suburbs for growth and are available for a range of regions. Budget Suburbs Prediction Reports select the most likely suburbs for growth where median property values are under $500,000.
Predictions Reports are a vital pre-selection tool for anyone advising or investing in the Australian property market.
Best Rent Report $250
This quarterly, Australia-wide Report is ideal for an investor looking for a mixture of capital growth and rental return. The predicted total return of suburbs in this Report typically exceeds 10% p.a.
Each suburb is statistically pre-selected prior to extensive research by the Residex team. Not only does this Report give you vital statistics, it also tells you why each suburb makes a good investment area. This is the most intensively-prepared Residex Report, and also features an overview of each state and territory property market.
Annual Subscriptions are available, with four quarterly Reports for the price of three.
Renovator Reports $215 ea
As a market first, Residex has developed two Reports specifically designed to help you build wealth through property renovation.
The Renovators Top 100 Report identifies the best suburbs in a selected area with renovation potential. The Report also tells you the number of streets in each suburb with renovation potential and provides information on future growth and rental returns, ensuring you find the best locations in Australia.
After identifying the right suburb, the Renovators Suburb Report helps you find the streets that offer the best opportunities. This Report is the ultimate tool to price a property and to identify those which are best for renovation. A page is devoted to each street in the suburb, detailing the price structure of the street, if there are renovation opportunities and at what price points opportunities exist.
Residex Product Range
SAMPLE
www.residex.com.au ©2015 Page | 141
Postcode Explorer Report from $90
This Report contains a list of sales in a specified postcode that have occurred over the last 12 months. An indexed sale price is included for every sale. This provides a current day value for each property based on the last sale price and the growth that has occurred in the area since the sale date.
For the specified postcode, you receive the median value and rent, historical returns from 1, 2 and 3 years ago, and 5 and 8 year predicted growth rates for the area.
This Report is ideal for those who have selected an area where they want to buy and are looking for an in-depth understanding of values at property-level.
Comparative Market Analysis Report $65
Are you intending to buy or sell a property, or would simply like to know what your property is worth?
This Report includes the sales history of the property, and the recent sale is indexed to today's value. You will also receive a list of comparable sales, 5 and 8 year growth rate predictions, median value and rental returns.
Indices $95
Do you want to better understand housing market cycles?
Residex Indices are available for houses or units at a suburb, postcode, region, Local Government Area or state level. Each Report includes an index for the specified dwelling/area for as long as Residex holds data for.
Delivered as an excel file, Residex capital growth indices are the most accurate measures of capital growth available in Australia.
MarketFacts contact for price
If you are a real estate agent, mortgage broker, valuer, developer, investment advisor or a dedicated private investor, MarketFacts property information software can help you.
MarketFacts delivers best in class residential property data and marketing solutions. Including historical sales data, a property search tool, price estimates, property Reports, calculators and marketing aids, MarketFacts is the ultimate data and marketing tool. MarketFacts can help you get more leads, generate business from your existing clients, increase your loan conversion rates and enhance your professional image.
How to order…
Reports can be ordered online at www.residex.com.au where a sample can be viewed for most Reports. Alternatively, you can call 1300 139 775 during office hours or complete the order form on the next page.
SAMPLE