Residex report - no reasons why?

[piNoob]

Hi,

I was a bit suprised to find out that Residex Top 100 for QLD prediction report does not provide any reasons as of why they think selected suburbs will perform better than others.

One would think when they prepare data for the report, they should have some notes about why they think suburb A is better than suburb B etc.

Otherwise you can just write a simple program which selects top performers from their database, randomize a little and declare it a report

Or am I missing something?

 

[ozi]

Maybe they just select them out of a hat? There really is no guarantee that the suburbs they select will be top performers. I would use there recommendations as a rough guide and definately do your own due diligence.

Cheers,
Ozi

 

[Twitch]

From memory, Residex report look at the longer term history of value appreciation in a suburb, the recent history of values, some macroeconomic factors, and use that to project out future values for the suburb. So if a suburb has a long term history of doubling every 10 years, and it's done nothing for the past 5, then they'd project some strong short term growth (macro factors allowing).

The deliberately don't take into account the "soft" factors such as new motorways, marinas, gentrification, industry closing down etc etc. They leave that to you the investor to find out and then combine with their predictions.

The idea is for you the investor to pick an area which Residex predict will grow, and that also has some "soft" factors going for it.

 

[CHISEL]

residex

Hi,

I was a bit suprised to find out that Residex Top 100 for QLD prediction report does not provide any reasons as of why they think selected suburbs will perform better than others.

One would think when they prepare data for the report, they should have some notes about why they think suburb A is better than suburb B etc.

Otherwise you can just write a simple program which selects top performers from their database, randomize a little and declare it a report

Or am I missing something?

Hi Noob,

what you are missing is that Residex does not know WHY ? they only Know that the growth happens they dont know why.

1. they have data on house price cycles
2. they have data on inflation
3. they have data on interest rates
4. they have data on repeat house price sales

they toss them all together add their formula and hey presto.

I personally have found residex good. not saying they always work.

understand that undelying human behaviour is the force behind the data.

Just like some/ a technical analysis of securities. Often traders and investers dont even know what the company that they are trading does.

they are only cocerned with wether the indicators show up down or sideways.

As far as I know Residex doesnt physically go to the post code.

but dont take my word for it ring them and ask them.

CHISEL

 

[piNoob]

I was afraid that is is the case

I mean that they simply look in historical data and assume it will repeat itself.

For some reason I was thinking that they might look in other factors like infrastructure etc..

In this case how this reports is any better than just by looking at historical data in say API magazine? They usually provide 10 years ( or even more? ) of data for every suburb in Australia.

Difference is API mag costs like what, $9 where this report for QLD alone is >$200.

 

[kaf]

My understanding is that residex doesn't use the median value as API does (which is pretty unreliable) but they base their prediciton on a bunch of individual properties in the area and their re-sale value over time. So you get a better indicator for actual, realised growth in the area. You still have to do your homework on other factors affecting growth in the future. I find the report a useful starting point to narrow down the research.

Cheers

kaf

 

[CHISEL]

residex

I was afraid that is is the case

I mean that they simply look in historical data and assume it will repeat itself.

For some reason I was thinking that they might look in other factors like infrastructure etc..

In this case how this reports is any better than just by looking at historical data in say API magazine? They usually provide 10 years ( or even more? ) of data for every suburb in Australia.

Difference is API mag costs like what, $9 where this report for QLD alone is >$200.

Dear pi noob,

why are you afraid ?

eg I bought a unit in New Farm 2002 for $298,000.00 residex prediction 6-8% pa for 5 years. if residex was right I should have been able to sell for $417,000.00 assuming 7%pa.

I sold for $465,000.00 within the 5 years capital growth =9.3%pa

If you read residex's report they say that they dont assume historical data repeats itself They say it does.

What seems to be important is the timing of the repeat.

If you bought in New Farm now. it HAS trendy, cafe culture, river walk, parks. 2 klms to CBD ,infrastructure but might have negative growth for next 5 years

CHISEL

 

[piNoob]

thanks everyone for your input!

Don't get me wrong, I'm not complaining about the report, it does what it should, e.g. helps you narrow down suburbs and then its up to you to do DD etc.

Its still interesting though, for e.g. report predicts suburb X a 14% annual growth. For the last 10 years growth was 11.9% for that suburb. I wonder what makes them think it might be 14%? Clearly they know something else about the area?

Dear pi noob,
why are you afraid ?

eg I bought a unit in New Farm 2002 for $298,000.00 residex prediction 6-8% pa for 5 years. if residex was right I should have been able to sell for $417,000.00 assuming 7%pa.CHISEL

I'm a bit concerned, perhaps because its a lot of money we are talking about here

I saw some data before when QLD was flat for 10 years or so, I think in 80's. Thats what I'm afraid of, but then again I guess nobody can predict stuff like this.

 

[kaf]

I saw some data before when QLD was flat for 10 years or so, I think in 80's. Thats what I'm afraid of, but then again I guess nobody can predict stuff like this.

Hi piNoob

If you start looking closer at suburbs there were plenty of areas in QLD that were anything but flat during the 80s and I guess you use Residex to pick those out that have a good history of continuous growth. Or you bite the bullet and buy an ugly duckling and create your instant capital growth that way.

For me it's always the question of what I would do with the money instead of investing it in property. I personally would not have invested (other than in super) if it didn't go into property. I'm now considering direct shares but that's only since I've developed the mindset for investing which I got through property.

If you don't think property is going to do well and you'd prefer shares then do shares. The danger is to do nothing at all. Even if you buy a property and it stays flat for 10 years it's only lost opportunity cost if you would have done something else with the money. If the money just disappeared in your everyday spending without you really noticing it then hey what do you lose?

And the buying cost is only a lot of money on paper. Our first IP was bought at the very end of the last boom, appreciated a bit and then just sat there for 3 years. Did we care? No actually, we just realised that this kind of debt did not cause us a single sleepless night and we knew we had a really nice place in a nice area that will do well in the future. It's our enforced savings plan and it just happens to grow very nicely in Brisbane's current mini boom.

Sorry, you might just be a much more sophisticated investor than we are, squeezing the most out of every $ and then you'd be annoyed if there wasn't any instant growth. If you aren't, just have a go and see what you think.

just my 2 cents worth

kaf

 

[piNoob]

Sorry, you might just be a much more sophisticated investor than we are, squeezing the most out of every $ and then you'd be annoyed if there wasn't any instant growth. If you aren't, just have a go and see what you think.
kaf

Thanks mate, I guess you right, especially about doing nothing and spending money elsewhere..Knowing me and my taste for electronic gadgets it can get dangerous at times

And I don't think I'm sophisticated investor at all, quite the opposite, I'm unsophisticated as it can get

I think I have a problem of making first step, once this is done it will start rolling like crazy

 

[kaf]

I think I have a problem of making first step, once this is done it will start rolling like crazy

Yup the first one is the hardest - but you sound so keen you'll get there in no time .

kaf