Hiya,
I have been looking at Suburb Profiles on domain.com.au website. I noticed they have standard indicators like Median Prices, Long Term Trend, Auction Clearance Rate, etc but have also got a indicator called DISCOUNTING.Can someone please tell me what does it mean and how can this information be used in analysis.
Below is the link for Melbourne’s profile:
http://www.domain.com.au/public/SuburbProfile.aspx?mode=research&searchterm=3000
Thanks in anticipation
Sanjiv
*******“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
C’mon people
Please help me out here! thanks“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Hi Sanjiv, thanks for the link, it was very interesting for my area. I live in a small town where I know much of the population, and the figures looked very accurate. I didn’t know so many people owned their place outright though…very interesting. I knew the age breakdown and some other stats were certainly accurate to what I would have thought.
Anyhow, no idea about the discounting thing. Hope someone comes along that does know [confused2]
kjs
this article might explain the concept of discounting rate on property
http://www.findarticles.com/p/articles/mi_qa3681/is_199608/ai_n8740834It looks like it is the time value of money invested in property
however this 7% figure is a long term averaged growth in money of property averaged over 10 or more years. As property doesn’t grow at 7% every year but if averaged over a long term it works out to 7% however you need to take into account that the real growth is 7% – 3% = 4% due to inflation and then take the 7% and subtract 50% = 3.5% for capital gains tax *.30 for tax rate ect . = 1.5% lost in tax.
So 7%- 3%-1.5% = 2.5% real growth..
However some growth during the boom was more like 100%Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Wow duckster, thanks for the short version, that was heavy!
kjs
Thanks duckster,
Am I correct in saying the lower the discounting, the less risky the suburb is considered.
Regards
Sanjiv
*******“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
I don’t believe discounting in this case refers to the time value of money.
Dicounting used in relation to the other stats that are provided usually refers to the average discount that private treaty property was sold for in relation to the original asking price. Eg if a house advertised for $500000 sells for $470000 the discount would be 6%.
Have a look at an API magazine. Where it has the Auction clearance rates it usually has other market stats at a state level, two of these are Avg days on market and avg private treaty discount.Mal
Getting out of your comfort zone, can help you become comfortable
Hi,
Given the other stats and the fact that it’s Domain I would tend to agree that it’s Private Treaty discount.
Nice explanation of the discounting rate though, duckster.
Art
‘Great spirits have always encountered violent opposition from mediocre minds.’ – Albert Einstein
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