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04 Oct 2013

What can the past tell us about real estate?

 

Looking only into the last 12 months can be a very limiting tactic when attempting to predict trends in the future.

This is also considered a weak point within a significant amount of real estate research companies. These companies will offer services that inform us of the recent past. In most cases this can have significant limitations for informing property investors or buyers.  Many people have only used this data and purchased on a limited data set.  This has additional risks which could have been mitigated with more thorough history research.

Usually the news that a suburb has recorded strong growth in the previous year will generate a surge of interest in the locale.

When people consider past performance they assume history will repeat itself in a short period.  This is not necessarily irrelevant as a location with strong capital growth can give some hints to investors. What is more important however is what lays further down the track.

Approximately a decade ago, beach front properties received a surge in investment and growth. In most cases this was a short term phenomenon, and anyone who based their buying strategy on that particular example of the recent past will have been disappointed.

Since that time Australian property has been at a steady plateau although signs are positive for the future.  The key point is that an attractive recent past does not translate into a prosperous long-term future. You must diversify your research and consider more than a 12 month history.

For further information contact us at Alert Property Group.

 

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