Are Residex future predictions historically low/conservative???

[mixedup]

Hi,

Question: Are Residex future predictions historically low/conservative do you know?

As an example when they predict Brisbane Houses: 4%+ pa next 5 years, 5%+ pa next 8 years.


Background: I'm pondering the average/worst case growth for my spreadsheeet It does seem quite a challenge at this point in time with variations such as (a) current ~18%, (b) Residex ~4%, and (c) the "doubles in 10 years" is just over 7%. I'm thinking I'll stick with 4% over the next couple of years and then ramp it up to 7% for medium & long term.

 

[BayView]

Why not find an area that will ramp up to 7% or more; from day one?

There are areas which will get you close to that, but you need to go look for them, and they may be areas that are going through demographic and infrastructure changes right now that will deliver very good cap growth/rent demand in the near future.

For example; a growth corridor near a major city that is within commute distance, and the houses are more affordable and there are a stack of new businesses, malls, parks, schools hospitals etc being built or planned.

Or an undervalued suburb with great infrastructure that is near a booming suburb.

These are good indicators of an area about to boom, and could/would be missed in a Residex type report.

You need to do some hard digging to find the diamonds.

 

[Ahmad Azimi]

Read this.

http://www.pennisi.com.au/downloads/property_market_report.pdf

 

[tubs]

While Residex may predict low growth overall for Brisbane, they predict much higher growth for some suburbs, some up to 14% over the next 5 years. This means that some areas are in high demand, whereas others will probably tank.

Personally, I think the days of buying anything and you'll make a profit are over. Good growth is still there, but you have to be far more selective of the suburb and individual property than years gone by.

 

[mixedup]

Tubs - which report do I look for re "they predict much higher growth for some suburbs" can I ask?

 

[tubs]

Yep.

Best Growth Report. Its released for Sydney, Melbourne and Brisbane (separate reports). Have a look at the residex website for more info.

Basically you get (in order of forecast growth) the suburb, expected growth over 5 years, 8 years, median, historical growth and rental yield.

 

[mixedup]

tubs - do you happen to know whether they typically over-estimate/under-estimate/get things right?

 

[tubs]

I've used them for purchases before, and knows others who have as well. They seem good. The point would be more to look at the top suburbs from a ranking point of view. Whether a figure of 10%pa turns out to be 8% or 15% I couldnt really comment.

They are better used as a ranking tool to see the highest predicted growth suburbs in each area.

 

[mixedup]

do you use the Best Rent report? (a bit more expensive it seems)

 

[tubs]

I understand that the best rent report reports yields >5%, and ranks them by CG prospects. I also hear that the chances of CG are a lot lower than those predicted by the Top 100 suburbs reports. So you'd want to be fairly keen on yield before doing this.

Having said that, the last Residex I got (Brisbane) from a few months ago had a lot of suburbs that were yielding around 4% anyway, and very good CG prospects.

 

[dheath]

Hi,
Does "The Residex report" ($300) include the "Best growth report"($200) and more? or to get the best capital gain suburbs, do I have to buy the "Best Growth report"?

I am interested in both regional and metro QLD.

Regards,

Duane.

 

[mixedup]

from what I've read the base Residex report is mainly historical, where the Best Growth is supposed to give predictions. The Residex chap I called suggested the Best Rent report as it includes rental projections, but does also include growth as well... (haven't bought either of these last two yet however)

 

[tubs]

Depends on what you're after. I believe the growth rates in the rental report are quite low.