Research Similar Property Sales
This is the most important part of the process, especially in today’s market where real estate agents aren’t putting prices on properties and they are ‘leaving it to the market to decide’. In other words, they are hoping someone is going to overpay.
The fundamentals of a strong property market include:
Low days on market—Days on market indicate how long it takes from when a property is initially listed until it is sold. Longer days on market means it is harder to sell the property because it is taking longer. As you can see from Paddington the days on market has been relatively stable since 2000 sitting around 32 days compared to broader Queensland which takes 37 days.
Stable weekly asking property prices—Weekly asking price is another indicator of market health and shows the trend of asking prices in your local market. In Paddington, you can see this has remained broadly stable; as it uses median house prices it is difficult for this to be a completely accurate indicator as Paddington often has property sales over $3M which can cause the numbers to be thrown out.
Supply and demand in balance—As we covered above, if there is too much supply and not enough demand prices tend to soften. The number of houses for sale in Paddington has remained fairly stable since 2012, compared to the number of units which has increased.
Demand to Supply Ratio Score—DSR uses a few more data points to estimate the demand to supply ratio, a simple predictor of capital growth potential. The DSR Score in Paddington is 56/100 (anything over 50 is good) and as it explains, ‘This is a healthy market for investors wanting to apply some value-adding strategy. Buyers are sometimes able to get away with low ball offers. Expect growth to marginally exceed the national average.’
Overall, the property market in Paddington looks good, and with a limited supply of new homes being built, you would expect the property market to remain strong over the next few years.