Australians are now able to keep track of the value of their property investment on a daily basis with the launch of a property value index on the Australian Stock Exchange. The index will track the changes in the value of property markets in Australian capital cities on a daily basis. This is revolutionary, as the only comparable scheme has occurred in the U.S., using data that was at least two months old. Today Belle Property reports.
In an age where information is power and time flies at the speed of ultra-fast broadband, Australian investors are eager to keep abreast of any fluctuations in their investment. The property investment index is calculated with data gained from price updates based on sales across the country. Data can be compiled in a more timely fashion due to advances in computing technology. Using what is called hedonic methodology, the size of the property and attributes such as the number of bedrooms, bathrooms, location and market trends over time are taken into account when calculating the index. Previously, data on property value was calculated on a monthly or quarterly basis, based on information provided by several different property groups. For further information regarding how the index is calculated, click here.
With property being most Australians’ most significant financial investment, representing approximately 3 times that of the $1.2 trillion value of the equities market and $1.3 trillion in superannuation funds, it makes sense that this kind of values database would be a popular concept. However, the decision to develop a property value index has been largely driven by property investors, particularly those from overseas hedge funds who keenly observe Australian house prices. Consequently, there is a some debate over whether such a measure is truly necessary, particularly for the average local housing investor. Following the day-to-day changes in property value may not be worthwhile, as macro-statistics don’t necessarily reflect micro-trends in local markets. Reacting to short-term changes in property values may not be profitable, as these fluctuations do not account for long-term outcomes. Generally, the cost of selling, moving and taxes incurred would outweigh any losses reflected in minor fluctuations in the property market.
Ultimately, the features of an attractive suburb remain valuable in the long term and buyers need to consider the tried-and-true measure of property value - such as access to desirable amenities including good schools, transport, employment and infrastructure.