Prestige property prices, pundits and predictions

August 20th, 2008
telescopeLooking for guidance as to the likely direction of prestige property prices in Sydney?

One of the most popular of these projections is the comprehensive “Spring Property Guide” compiled by Australian Property Monitors and published in early September each year in the Sydney Morning Herald.

In 2007, the Spring Property Guide was published on 1 September.

This year, it was published on 13 September. The Spring Property Guide collates suburb by suburb the percentage change in actual median house and unit prices in the preceding twelve months to 30 June and predicts the percentage change in median house and unit prices over the next 12 months; nominating Sydney’s next “hot spots” in the process.

As the Spring Property Guide does not compare the percentage change in actual median house and unit prices in the preceding twelve months to 30 June against the predictions the Guide made in the previous year, CurtiseCall has, as far as possible, done the exercise for prospective buyers whose purchasing decision might be influenced by such projections.

What follows is a comparison of Australian Property Monitors statistics published in the Sydney Morning Herald which is a direct comparison except for the non overlapping but relatively quiet winter months of July and August in each of 2007 and 2008.

We start with a ‘predicted v actual’ comparison of all “hot spots” nominated in the 2007 Spring Property Guide:

Suburb Property type Predicted percentage change in median price Actual percentage change in median price
North Willoughby houses 15+ 1.1
Pymble houses 10-13 2.6
Pymble units 10-13 5.6
Bayview houses 15+ -10.2
Balmain East units 10-13 15.8
Edgecliff houses 12-15 5.7
Gymea Bay units 11-14 -18.7
Narwee units 10-13 -0.9
Londonderry houses 15+ -12.2
Avoca Beach units 10-13 11.5

Next, we compare the other suburbs in which you would expect to find Sydney prestige property:

Suburb Property type Predicted percentage change in median price  Actual percentage change in median price
Cremorne Point units 2-5 -4.8
Mosman houses 2-5 10
Cammeray houses 4-7 19
Greenwich houses 0-3 19.8
Hunters Hill houses 1-4 11
Lane Cove houses 0-3 18.2
McMahons Point houses 5-8 20.5
Northbridge houses 4-7 19.4
Northwood houses 7-10 23.8
Waverton houses 0-3 25.6
Castle Cove houses -3-0 21.9
Roseville houses 7-10 13.3
North Turramurra units 1-4 19.7
Narrabeen houses -6- -3 17.1
North Manly houses 3-6 16.5
Palm Beach houses 7-10 -14
Seaforth houses 7-10 19
Balmain houses 0-3 17.2
Birchgrove houses 0-3 16.8
Rodd Point houses 2-5 23
Rozelle houses 4-7 16.3
Strathfield houses 1-4  0.6
Bellevue Hill houses 0-3  15.2
Bondi Beach houses 3-6 17.6
Bondi Junction houses 2-5  20.7
Bronte houses 7-10 19.6
Clovelly houses 4-7 18.5
Darling Point houses 4-7 13
Darlinghurst houses -1-2 11.5
Dawes Point units -9 or less 11.7
Double Bay houses 7-10 23.9
Dover Heights houses 11-14 6.5
Edgecliff houses 12-15 5.7
Edgecliff units 3-6 23.3
Millers Point units 1-4 17.6
North Bondi houses 5-8 23.5
Queens Park houses -1-2 19.8
Randwick houses 0-3 21.5
Rose Bay houses 3-6 14.9
Surry Hills houses 3-6 16.2
The Rocks units -4-1 19.7
Vaucluse houses 8-11 2.7
Woollahra houses  5-8 5.9
Paddington houses  6-9 7.9
Blakehurst houses  -1-2 17.2

The significant number and sometimes, size of the variances recorded in these tables shows the difficulties forecasters have, despite their best efforts, in predicting future movements in property prices. Part of the difficulty is the low volumes of transactions in each suburb and therefore upon which to make predictions. Generally, the smaller the sample, the greater the variation. The highly accurate projections for the relatively high turnover and homogenous suburbs of Woollahra and Paddington show the reverse also applies.

The lesson here for buyers is that while macro level property reports and analyses like this make for interesting weekend reading, they are no substitute for more micro level analysis based upon the largest possible sample of specific re-sale histories that can be found and as should be provided by a buyers’ agent or buyers’ advocate such as Curtis Associates (