Million Dollar Houses

In mid-March I received an e-mailed "Market Update" from a pair of the Burbs' finest spruikers. It is less of an actual update these days as this would require admitting to serious weakness in the market and even this pair realise you can only spin things so far.

So, instead of a useful and informative update the aforementioned duo furnished recipients with "an interesting fact":

'.... according to the Courier Mail, the first time a home sold for over $1,000,000 here in Brisbane was in the late 1980's. Today, $1,000,000 plus sales account for 6 per cent of sales made and that is double what it was in 2005.'

When I first read this I was puzzled as to why they would think their pool of potential buyers might find this particularly helpful ... and then the penny dropped: was it possible that our friends were attempting to embed the idea that, with the number of $m property sales doubling in Brisbane in the past 5 yrs, that this trend could well repeat itself in the next 5yrs? They go on to suggest that this isn't unreasonable either because $1m+ sales currently only make up 6% of all property sales.

6% is a small number, but it's a number without any context, so we are none the wiser as to what is reasonable under the circumstances. With the market as slow as it is right now, you'd have thought our spruikers would have had the time to look up the percentages for other metropolitan areas for the purposes of comparison -- and perhaps they did, but maybe the results didn't "suit" their thesis, who knows.

Of course, the lateral thinkers out there might consider the view that a doubling of $m+ property sales in just 5 short years may be an indicator that the property market has indeed risen too far, too fast, but perish that thought. No, prices are simply marching toward their long-run equilibrium value which is some way off yet, surely.

The final paragraph in the Market Update says the following:

'According to realestate.com.au, there are currently 148 properties listed for sale for more than $1 million around Brisbane, 305 in Sydney, 191 in Melbourne and 217 in Perth.'

Again, I'm scratching my head trying to decide why this is relevant in any way. In fact, it's not even that interesting. However, it does prove one thing and that is that our spruiker friends are not very adept at using the nternet:

Dated March 17th, they suggest there are 148 properties listed for sale across Brisbane on www.realestate.com.au above the $1m mark. A curious claim, I must say, because I've just done a search of properties in this bracket for the Western Burbs alone (including the immediate surrounding areas) and it suggests there are 199 properties for sale in this bracket. Goodness knows what the total number is for the whole of Brisbane but I'm willing to wager it's a lot closer to 1,000 than it is to 148.

For further reference, a similar search of the Burbs and surrounds two weeks ago revealed only 170-odd properties for sale in this bracket. I can't recall the precise number but that same search in August/September last year was only offering up 50 to 60 properties. Wow! Somebody had better start buying these $m homes soon otherwise the market will be drowning in them before long. I opened the Courier Mail property section this weekend and counted 3 sales over $1m in the 'Recent Sales Results' section (for the entire Brisbane Met). I know not all sales get reported in this section, so let's be generous and triple that number to 9. Nine sales in that bracket and something close to 1,000 properties on the market with the numbers rising fast.

But never fear, folks, there are thousands of migrants arriving in Brisbane every week with $m housing budgets and they're all dead keen to help keep the great Aussie dream from deflating -- not to mention the bank balances of the Burbs' favourite spruikers!