Written by Terry Taylor – Specific Property
Is there no end to the distortion that people like Roger Montgomery perpetrate in the press on the residential property market?
In The Weekend Australian of January 27-28 2018, an article written by Roger Montgomery was titled “Brisbane units crunch to be felt nationwide”. Now this is not the first time that we have commented on an article by Roger Montgomery, but there seems to be no end to the distortion and deception that people like him perpetrate in the press when talking about the residential property market. A copy of his article is attached so you can see for yourself, exactly what he is saying and why what he is saying bares absolutely no relevance to the truth.
Mr Montgomery has a habit of publishing articles like this one, but this time, he uses figures in a way that is intended to deceive or distort how the market is actually performing. It would be a joke if the consequences weren’t so serious. Many people believe everything they read in the press and base decisions that they make on what these supposed experts are saying. In the article, “Brisbane units crunch to be felt nationwide”, Mr Montgomery made the statement that Brisbane apartment prices plunged on average by $81,000 and that there was still more to come according to him.
He references a report by property consultants Urbis, who actually did publish the figures which show June 2017 averages at $725,563 and September 2017 averages of $644,667, which is indeed a variance of the $81,000 that he is talking about. What he conveniently left out is that the figures in the December 2016 quarter and March 2017 quarter were $673,281 and $670,861 respectively. Notwithstanding this, the figures actually mean nothing because if you were to read the Urbis report to which Mr Montgomery is referring you will find that the supposed price fall is based on the fact that in the September quarter of 2017 there was a return to a more normalized mix of 1,2 and 3 bedroom sales, compared to a higher proportion of more premium price point stock selling in the June 2017 quarter. The Urbis report specifically mentions this as the main reason for the decline, yet Mr Montgomery completely glosses over this.
Also, Mr Montgomery at no point mentions that these figures are averages only for brand-new property sold, and not for all (new and existing) properties sold in Brisbane. To that end, it sounds like the entire Brisbane apartment market has fallen over, this is far from the truth.
To further put some perspective into the prices of apartments in Brisbane, we can look at the median prices for sales of attached dwellings as published by the Australian Bureau of Statistics. Attached dwellings include flats, units and apartments plus semi-detached, row and terrace houses. We have referenced the same quarters as in the Urbis report.
December 2016 – $397,800
March 2017 – $400,500
June 2017 – $395,000
September 2017 – $403,500
Clearly his article is meant to distort the view of the market for what are obviously his own purposes and whilst the figures he uses relate only to new properties, those median prices of new properties are based on what is actually built in that quarter. For example, if in any given quarter only cheaper one bedroom apartments were sold, the average new price for properties sold would fall dramatically based on a previous quarter when perhaps the only properties sold were high end three bedroom apartments. Once again and clearly the figures that he is reporting, mean absolutely nothing in the way he is reporting them.
A good example of that can be seen in the same Weekend Australian, in which his article appeared, where another article written by, Robyn Ironside, titled “Size really does matter” showed that some larger apartments in Brisbane, 10 kms outside of the Brisbane CBD, had soared in value by 121% to $1.12 million in the past year and based on 26 sales. It obviously does make a difference what type of property and where that property is, and in what quarter it is sold.
All of this of course does matter to prospective purchasers who need to look at what they are buying, where they are buying it and who the property was built for. This is regardless of whether the property is new or not. As we have said many times before a residential property is someone’s home and if we fail to get that right we have missed the point and those properties that have been designed well and positioned well will experience good growth in price over an extended period of time and they will always be in demand by tenants if those properties are owned by investors.