Join Australia's most dynamic and respected property investment community

Stats vs Fundamentals - Which is more important?

Discussion in 'Investment Strategy' started by B-Mac, 17th Feb, 2016.

Tags:
  1. B-Mac

    B-Mac Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    78
    Location:
    Sydney
    Statistics vs fundamentals - which is more important?

    As we know there are so many variables which drive up prices, however, consider if we only studied the price trends (e.g. prices, number of sales etc). Wouldn't that allow one to enter in the 'rising' point of the market for any particular suburb/area?

    Seems like a very different approach to buying based on the 'standard fundamentals' such as increased government infrastructure spending, gentrification etc.
     
  2. barnes

    barnes Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    674
    Location:
    Adelaide
    Fundamentals. Statistics only give you the past, fundamentals point the future.
     
  3. B-Mac

    B-Mac Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    78
    Location:
    Sydney
    So i could analyze specific areas with the fundamentals & interpret real-time stats to pinpoint when prices start to climb?
     
  4. York

    York Finance Broker Business Member

    Joined:
    24th Jun, 2015
    Posts:
    1,721
    Location:
    Sydney
  5. Lisa Parker

    Lisa Parker Well-Known Member Business Plus Member

    Joined:
    24th Jun, 2015
    Posts:
    264
    Location:
    Melbourne
    I like to look at both. Data can be skewed sometimes I find, but I think it still tells an important story. Particularly if you grab a few different data sources and compare them.

    If a suburb has a large disparity between lower priced homes and higher priced homes then the median price data can skew results. However if the area has a fairly consistent pricing (ie 80% of homes fall between say $400k and $500k) I find the data is more accurate according to what is happening on the ground or has been happening on the ground.

    If you can segment the data by location within a suburb, this removes the issue.

    One case in point was an RP data or Residex suburb report I viewed where the median price was far from the actual real median for that area. Out of the 10 houses it used as data samples about 7 of them were actually warehouses or commercial properties in the light industrial/business zone.

    I think it's important to know the suburb well from being on the ground and knowing the surrounding areas as well as looking at the data.
     
    Leo2413 likes this.
  6. Leo2413

    Leo2413 Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    7,605
    Location:
    Sydney, Brisbane, Taiwan, London
    Technicals/stats often lag behind the fundamental action taking place. If you only follow the stats, you'll miss out on some of the best unfolding opportunities.
     
    hammer, York and barnes like this.