good news in a bad market, page-24

Dear Benny, one thing you should be careful of is how statistics can be distorted by gentrification of suburbs. Take an old suburb, where effectively the houses are being bought so they can be torn down for a new larger property. if they sold as a tear down and then resell as a new completed home for say $800,000, which is not uncommon, there is a perception of a 100% increase in price.

Also the average house over the last 10years is significantly larger. Accoridngly, this is reflected in the price. The important factor to determine whether to buy and whether there is growth is what your house represents. If it is the smallest, least developed house on the biggest block at well below average then its a goer as it can be either subdivided, refurbished to make it comparable (but know the costs of refurb before buying).

If the house is the biggest, nothing more can be done to add value and at close to its real value then unless there is something exceptional staty away as an investment.