Prestige property prices, pundits and predictions

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:

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

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 (www.curtisassociates.com.au).