3 ways to determine the true state of the market

But researching the detail of what is actually happening on the ground will provide more accurate insights on how it is really performing.

Here are Mr Driscoll’s three top tips for determining the true state of the real estate market:

1. Review the number of days on market
When the number of days on market goes down it means that the market is doing well, and vice versa — regardless of other factors, like the overall number of listings.

For example, in Sydney in July, according to data from CoreLogic, about 1,000 more properties were listed for sale this year than last, but the average days on market has moved out to 40 days from 26 in July last year.

So, despite its apparent increase in activity the Sydney market appears to be cooling.

2. Assess the price percentage ratio
Another measure is to look at the price-achieved to price-asked ratio for the market you are interested in.

Many agents send email newsletters detailing new listings and recent sales — with prices achieved. Get on these lists to keep in touch with the price-percentage ratio in your local area.

There are also some free online tools that can help track the advertising history for properties, to get an indication of property sale histories and what price reductions may or may not have occurred.

3. Determine the accurate auction clearance rates
Currently there is no automated process for accurately reporting auction clearance rates, and the results are often distorted — by what’s being both withheld and included.

In many cases agents either won’t disclose the details of properties that were passed in, or they will deliberately include those that sold prior to auction.

To compensate for these anomalies, a good rule of thumb is to take approximately 10 per cent off the clearance rates seen in the headlines.