In data we trust: How data informs smart property buying decisions

In data we trust: How data informs smart property buying decisions
In data we trust: How data informs smart property buying decisions

The famed professor and statistician W. Edwards Deming once said: “In God we trust. All others must bring data”. For anybody interested in real estate, from the property professional to the armchair investor, this maxim is more relevant today than it has ever been.

Thanks to mobile and online technology, the average Australian is overwhelmed with access to a huge realm of data – from macro-economic trends such as interest rate changes to the in-depth granular property statistics on transactions and suburb details. There really is a smorgasbord of information at our fingertips.

The information is an invaluable tool. Data can help inform people’s property buying decisions and it can make us feel confident about –those decisions, by providing us with a guide to what will occur in the future.

But the important thing for us to realise is that not all information is created equally, particularly the statistics.

There are various sources of property information in the market. These include sales and listing records, auction clearance rates, various statistical measures from parties such as the Australian Bureau of Statistics, and many other non-government organisations. While some of this data is open and public, much is not.  Taken together however, this data is extremely valuable, because of its multitude of applications:

  • Financial organisations use to it determine valuations for mortgages;

  • Investors and buyers can use data to pinpoint potential areas for investment;

  • The Reserve Bank and Federal Treasury uses it to identify when markets are too hot and need cooling or stimulating;

  • State governments use it to help predict their annual revenue as a large percentage comes from duties on property.

For the consumer or property professional, there are a host of third party sources that capture this data and present it in various forms. But not every source presents the same information.

Broadly, the challenges facing property information providers can be broken down into two areas: the accuracy and method for collecting the source data and the application and analysis of the data to provide real insight.

When it comes down to the first challenge – the freely available public data is obviously the first go-to source. It then comes down to  enriching it that with deeper information, and this can be something as simple as having a team picking up the phone to real estate agents to find out who sold what. Obviously a lot of this process is automated, and will vary by provider. For example, sources closely aligned with media companies will use that media company’s listing data as a primary source.

However, while having accurate data is clearly vital, information without context is useless. 

That, in essence is the challenge for all property data companies. It has moved on from who’s data is more accurate and who has more records, to how it can be used to provide value and confidence to the person on the street. It’s not just about finding the data, it’s about turning it into intelligence and bringing it to the right people, in the right way.

John Edwards is consulting analyst for Onthehouse.com.au and founder of Residex.

Onthehouse.com.au has launched a new Investor Centre, a free source of property information.

             

Community Discussion

Be the first one to comment on this article
What would you like to say about this project?