3 Ways To Work Out How Your Market is Doing

Have you ever wondered how the property market you’re interested in is performing right now??

The old method was to pick up the phone and call your local real estate agent, ask how the market is going, and get their personal opinion. But in 2024, there's a better way.

Gone are the days when you need to rely solely on others for market insights. You can now get real-time data straight from your computer to assess how a property market is doing. Whether you own a home and are considering selling, are in the market to buy, or are simply curious about your area, these three simple metrics can help you understand the current property landscape with ease.

Metric 1: Housing Finance Data

The first metric you want to look at goes beyond your local market – it's Housing Finance Data. In my opinion, this is one of the most underutilised data sets when it comes to assessing the state of a property market.

What is Housing Finance Data? It's a collection of loan applications reported monthly by the Australian Bureau of Statistics (ABS). This data gives you a clear indication of demand: Who’s applying for loans? How many people are seeking loans? And where are they applying?

An increase in loan applications means more people are looking to buy, signalling rising demand and likely upward price movements. In fact, we’ve seen owner-occupier Housing Finance increase by 25% since the property downturn in January 2023, while investor Housing Finance is up 45% across New South Wales.

Housing Finance Data is invaluable because it offers you a peek into the future of a market’s performance. If more investors are looking for loans in your area, it’s a strong indication that prices are on the rise. You can access this data every month directly from the ABS website – no need to call your agent or broker.

Metric 2: Auction Clearance Rates

Next up is a metric that’s particularly useful in Sydney and Melbourne – Auction Clearance Rates.

Auction clearance rates tell you how many properties successfully sold at auction during a given week. While some may argue that auction data is unreliable because not all results are reported immediately, the trend and baseline numbers are what matter. For example, in Sydney, a clearance rate of 70% typically indicates that house prices are rising, while anything around 60% suggests that prices are stable or slightly declining.

If clearance rates exceed 80%, it’s often a sign that the market is booming. Conversely, when clearance rates dip to 50%, it's a signal that the market is slowing down.

Auction clearance rates correlate directly with house price movements. If you follow the data over time, you’ll notice that as clearance rates rise or fall, house prices tend to follow suit. So, keep a close eye on this metric if you’re trying to gauge market trends in Sydney or Melbourne.

Metric 3: Demand and Supply Ratio Analysis

The final metric is Demand and Supply Ratio Analysis, which provides a more localised view of how a specific suburb is performing. This might sound complex, but it’s actually very simple when broken down into a few key data points:

• Days on Market: How long does it take for a property to sell in your area? If properties are selling faster, it’s a sign that demand is strong.
• Vendor Discounting: How much are sellers discounting their asking price to close a sale? Low discounts indicate strong demand, while higher discounts suggest that sellers are struggling to meet their price expectations.

Combine these two data points with vacancy rates and stock levels to get a clearer picture of demand and supply in your chosen suburb. If demand is increasing but supply isn’t keeping up, prices are likely to rise. You can easily access this data on platforms like SQM Research, Domain, or CoreLogic.

Putting It All Together

By combining these three metrics, you’ll be well-equipped to assess your property market with confidence:

1. Housing Finance Data gives you an overview of market demand at a state level.
2. Auction Clearance Rates provide insight into current price trends, primarily in Sydney and Melbourne.
3. Demand and Supply Ratio Analysis helps you drill down to the suburb level to see how specific areas are performing.

Whether you’re a buyer, seller, or simply curious about the property market, these metrics will give you a clear and data-driven understanding of where things stand – all from the comfort of your computer.