Analysing the property market: Why clearance rates aren’t enough
The clearance rate, often overrelied upon by media outlets as the definitive indicator of market performance, is a singular data point that can distort our perception of the property market.
While the figure indicates the proportion of homes successfully sold at auction, clearance rates alone do not provide a comprehensive picture of real estate dynamics.
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Whether you’re a prospective buyer, planning to sell your home, or simply passionate about property, I encourage you to adopt a hyper specific approach when analysing market data rather than general indicators like clearance rates or median house prices. Every suburb performs differently at any given time, so using these methods will empower you to proceed with confidence and certainty about the conditions of your target market. Your research should be holistic, diverse, and geographically relevant.
Get to know the suburb
Get to know the suburbs you like and the aspects you are drawn to. All suburbs have price variations, so you need to find out why they happen. Some reasons for these might include local school zones, shopping precincts, or access to public transport. Having a selection of desired locations, rather than limiting yourself to just one, and being somewhat flexible will boost your chances of finding a suitable home.
Utilise real estate portals
Real estate portals offer location-specific listings and sales alerts, providing detailed insights into areas of interest to you. By refining your search and tracking homes that meet your criteria, such as the number of bedrooms, bathrooms, land size, or renovated bathrooms and kitchens, you can gain a deeper understanding of fair market values for properties that match your preferences.
Immerse yourself in campaigns
By actively inspecting properties, attending auctions, and engaging with campaigns, buyers can better understand current property values, days spent on market, and the level of buyer interest types of properties are generating. Leverage other forms of data – the Real Estate Institute of Victoria (REIV) provides valuable suburb insights, beyond just clearance rates and median house prices. While REIV data relies on individual real estate agents submitting auction results, the figures help represent what is happening in the market. Two crucial metrics for buyers to consider are the total number of properties listed per suburb and their average days on the market.
Ultimately, when it comes to home buying, maintaining an open mind is essential. There is no one size fits all approach to real estate as everyone’s experience differs. Given its unpredictable and dynamic nature, being well-researched will boost your chances of success when navigating the market.
Anthony Webb is the head of Victoria for Belle Property and Hockingstuart.