How useful is a year's worth of data in the property industry? Do you use 12 month trends or look longer term? Say 3 or 5 years?
12 months doesn't seem like a long period to base investment decisions on in something like property?
Posted Using LeoFinance Beta
There's various uses for historical data and the trends they can reveal to a business like the one I work for. For a mum and dad investor there's little value in looking backwards at all, for a commercial client building a shopping centre it is invaluable. 12 months of data? Doesn't mean much when it comes to investment decisions and someone basing their decisions on the last 12 months is sure to make a decision around too little information.
What happened in a five or ten year period may have no bearing on a changing economic environment in the future though, so looking further back doesn't really help all that much either. Times change.
The loss of a major employer, which is what happened in Elizabeth when the GM plant and it's support-suppliers closed causing 20,000 job losses, can force rapid changes and affect the future - Businesses, infrastructure-spending, household spending and house prices etc. The past doesn't really matter at that point, only the now and future. The loss of major projects has the same effect, the submarine and air warfare destroy projects for instance. Knowing what's happening now and in the future is often more important to investors, more so than what happened as there is no assurances it will continue to happen, or that extenuating circumstances could significantly change things. Trends of the past may not endure.
25 years ago people in Australia had the impression property doubled in value every year and to some degree it did, or at least saw steady growth...But times change and that is not the case anymore. Urban infill, high-rise, urban sprawl, demolish and divide, the opening of new land for residential and commercial development, opening of new transport corridors, even the building approval for a mosque for instance, can completely change what may have happened in the past. I mention the mosque thing because the building of a big mosque completely ruined pricing in an area here not so long ago - People left in droves and prices dipped...An area that had always had good rental yield and sales price. The same goes for arterial road building, airport runway extensions etc. Ruins pricing as demand ebbs.
Anyway, I can't answer this in a comment, or a post, or probably ten...It's too complex.
Depends on the suburb and the year, and who is considering the data? If my business is using it for marketing purposes then it can be very valuable, if one of my clients is looking at building a service station then data over the last year from a demographic nature is critical, but they would look further back - And way more distantly into the future...For mum and dad looking to buy a 2 bedroom unit or some such...12 months of data is almost useless. Most investors are not investors...They are people with a rental property - And they often do it really badly.
Depends on what we're doing. When pricing a house for sale or rent maybe 3 months historical, no more. What happened past that time is irrelevant to the present.
For my own needs, personally, I look at the last 3 years briefly...But am more interested in how many new builds the area had in that time, how many building approvals are in council now, what infrastructure is planned in the next 20 years (airports, roads, schools, cemetery's, shopping centres, parks, sports facilities, tram/train/bus routes...Etc.) Also what current house prices are, new builds and the older existing...The same for rent yields, the difference between an older existing house and a new one build over the old. (Sub-division). It's more complex that this but you get the idea.
My post was merely there to show the difference in a pre and post covid environment. I'd never offer financial and investment advice here or encourage anyone to look at anything I post and base decisions on it.
I'm not sure if this really answers your questions all that well. Sorry.
It does kind of answer my question - previous data is not that useful!
Thanks for the insight - there's a lot of variables as I thought there might be - those development plans you mentioned - how many houses to be built and the whole quality of life developments - I guess they're quite difficult to source in data terms! You just have to go on potential.
I guess the best place for a rental is a place where there's lot of good paying jobs for young people. All other things being equal.
Posted Using LeoFinance Beta
It's all done with a few clicks of my mouse butting whilst sitting in my office. We pay exorbitant prices for access to government records, development approvals and applications, titles etc. We can get it all. Most of the development plans we look for are done years in advance and are mostly available...Just the military stuff is locked. It's not in data form though, we have to make it so. Still, we know what to look for so it's not too difficult, just time-costly.
Yep, infrastructure...Shops, schools parks etc. It's all specific to certain countries though as we're all different...Culturally.