Counting houses is not as easy as it seems!

As a property investor you know that the supply and demand ratio is one of the major factors affecting property values. That’s why various research houses try and determine the number of houses up for sale at any time and compare this with perceived buyer demand.

But how easy is it to accurately count the number of homes for sale?

As I looked into this I realized how complicated the process is and that whatever figures we read are at the best fudgy.

In general I have found the property data provided by RP Data the most accurate.

RP Data say they collect listing numbers via a formal arrangement with property portal realestate.com.au, along with a weekly tally of classified ads from major newspapers. But that’s not as simple as it sounds….

When the process is completed, it’s not uncommon to have three or more separate advertisements for each property.

“The next stage in the process is to de-duplicate the dataset,” says RP Data. “We do this by normalising all the address strings (this is a complex process in itself) for each listing and then matching the normalised listing data to a central ‘ownership’ database – essentially a list of unique addresses for every property across the country.”

Sound complicated? Still following?

Another consideration RP Data must factor in is the fact that not every property is advertised consistently every week.

“For this reason our listing counts are based on a rolling four week period. Essentially this means that if a home has been advertised at least once over the past four weeks it will be counted as an active listing. Further segmenting the data, we can classify a home that has not been advertised for sale within the past 365 days as a ‘new’ listing – all other advertisements are classified as ‘re-listings’. Add the two together and that is our ‘total’ listing number.”

While RP Data says their methods are stringent enough to catch most properties on the market, they do concede that some manage to “fly under the radar”, including homes in new housing estates and high density apartment developments that are sold off the plan and not marketed individually.

According to RP Data, a peak in listing numbers was measured at 285,073 over the four weeks to June 12 this year, 48 per cent of which were located within Australia’s capital cities.

However they say that since then, national listings volumes have fallen by 7.5 per cent nationally and 7.6 per cent across the capital cities due to a slowdown in the number fo vendors listing their properties for sale and a slight improvement in transaction levels.

“Effective supply levels remain well above the highs seen back in 2008 however, highlighting that vendors have a lot of competition when it comes to selling a home,” says RP Data.

Definitely an ideal time to be a cashed up buyer!