News stories and real estate websites paint a picture of an ever booming and expanding property market. The reality may be quite different. By Chris Nash.

Selling the real estate dream

My parents married, bought a double block of land in Merrylands in the late 1940s with a war service loan and started a family. The suburb was then on the western fringe of Sydney – these days, it’s near the geographic centre.

There was an old weatherboard house on one of the blocks, where we lived while building a new fibro house on the vacant block. In the late 1950s, my parents sold the old place and moved into the new one. They owned and lived in that house until they sold to move into a retirement village in December 2003, getting a generous price of $596,000 at the tail end of the early 2000s property boom.

The man who bought the house said he wanted to use it as a childcare centre, but that was never going to happen – there was asbestos in the fibro cladding – and so it was rented out. He sold it three years later, in December 2006, for $420,000 – a nominal loss of 30 per cent.

The property site Domain offers a “full property history”, which displays information about previous sales for properties “provided under licence from the Department of Finance and Services, Land and Property Information”. The information is compiled and provided by Australian Property Monitors, part of the Domain Group, which was established by Fairfax Media and is now 60 per cent owned by Nine.

The history provided for my parents’ home includes three sales over the period between 2000 and 2010. One in 2000 for $300,000, another in 2006 for $420,000 and a final sale in 2010 for $425,000.

But there was no sale in 2000. My parents owned the home until 2003 and I have the sale documents. That purported 2000 sale could not have come from any official record.

The omission of the actual sale in 2003 sale hides the fact the property sold for a loss in 2006. Anyone reading the site would think there was actually a profit of 40 per cent – $120,000 over six years.

The Domain history omits another sale, for $452,500 in 2007, which suggests the property owner faced a $27,500 loss when the place was sold in 2010, although by that time the quarter-acre block had been subdivided, with a second house to be built subsequently on the separated back of the original property.

For the weekend of November 30, 2019, Domain reported 586 auction results. Analysis suggests few of these properties display any historical losses.

Looking at 60 randomly selected properties, with specified sale price, only five indicate historical losses. Two were adjoining lots on a busy road in Bankstown that a quick succession of owners seem to have tried to assemble for joint sale to an apartment block developer. also failed to report a loss on one of those two properties, but not the other. The other three properties were all in Bexley, and subject to rapid-fire turnover by speculators.

Of the other 55 properties in the sample, drawn from across greater Sydney and including both houses and apartments, Domain shows only nominal profits. However, for four of the properties, reports a loss-making sale that isn’t listed on Domain.

In 2013, an apartment in Arncliffe sold for $365,000, a loss from the 2008 purchase price of $385,000. An apartment in Balmain East went for $420,000 in 2007 at a loss from the purchase four years earlier for $447,500. Neither of these sales is reported on Domain. Nor was a loss of 47 per cent on a Belfield property between 1998 and 1999, or a quick loss of $5000 over two months on a Baulkham Hills house in 1993.

Of nine properties sold on November 30 – where there were current or historical losses – Domain reported losses for only five, and they were for speculators making fast turnovers. For the other four properties the loss-making sales were omitted. There are some absences in the histories of the total sample of properties as well, but only one historical loss omitted.

On Domain, an improbable, prosperous pattern spans the bursting of the 1996-2003 boom, the following stagnation until well after the global financial crisis and the sharp deterioration since the most recent peak in late 2017. Buyers of real estate, it seems, very rarely lose money on their purchases, whatever and wherever they buy, even though the general real estate market might decline.

But how could that be the reality? It is true that property owners try to avoid selling into a falling market, but in a downturn or prolonged stagnation some sellers don’t have much choice. And no doubt the “price withheld” tag on some reported sales could be a fig leaf for an embarrassing loss.

Domain’s data suggest only “speculators’ delight” properties lost value, while everybody else made a nominal profit despite two housing price busts and ensuing stagnations. The omission of 8.3 per cent of sales that are loss-making is a distortion.

A spokesperson for Domain told The Saturday Paper: “Domain Group policy is not to alter or remove past sales data supplied by the state and territory governments. The data is automatically sent to Domain (via APM) and updated regularly by the state government department. If we have a report that there is a major problem with the sales data, then our internal support team have an option to hide the entire history for the property. They have no capability to pick and choose which transactions to hide, all or nothing.”

Domain made no response to specific questions about the discrepancies evidenced above and the apparent divergence from their stated policy.

Since the privatisation of the NSW land titles office, it is expensive to do broad-ranging searches of sales price histories on property titles. Individual vendors with a detailed sales history of their property would have a direct financial interest in not drawing attention to any history that might imply a risk for future purchasers. Prospective buyers are unlikely to want to pay for detailed verification of multiple sales histories; they will be focused on comparative value for money in the contemporary market. And a general sense that you can’t lose when buying real estate would bring a warm glow to successful buyers.

Professor Bill Randolph, director of the City Futures Research Centre at the University of New South Wales, expressed surprise at this reported situation. It would be “a bad business move”, he said.

However, Randolph added that the “buying and selling of real estate is much more managed than most people realise, and is highly nuanced with different sectors playing support roles for the main game of generating sales. Press coverage of the real estate market is very much a good news story.”

Optimistic reporting on the real estate market is far from limited to Domain. For my own PhD research, I did a detailed analysis of journalism about the Sydney residential real estate market in the 1996-2003 housing boom. Historically, real estate advertising was one of the three main sources of the “rivers of gold” that funded the newspaper industry.

The housing boom, beginning in 1996, saw the take-off of a massive increase in household debt, which rose to more than 150 per cent of household disposable income. Interest payments as a proportion of household disposable income doubled to 12 per cent. Household savings went negative and outstanding balances on credit cards tripled. By the end of the boom in 2003, mortgage debt had surpassed both business and personal debt as a proportion of GDP, while government debt was negligible. Over the same period, Sydney house prices doubled.

But after the end of the boom, house prices in western and south-western Sydney dropped more quickly than in the rest of the country. Hence the 30 per cent drop in my parents’ home between 2003 and 2006. With the GFC in 2008, the falls spread to the inner-city, eastern and northern suburbs. The recovery took years.

To read the real estate journalism at the time though, it was always the right moment to enter the market – as seller or buyer – no matter what stage of the cycle.

Housing affordability, household debt and increasing homelessness were side issues dealt with elsewhere in the news, and largely a welfare issue. They had little to do with the market. The overarching imperative for real estate reporting is to keep the market optimistic and buoyant.

The long and the short of it is that very little of what journalists say about real estate should be taken at face value. Their very jobs depend on keeping the market busy and expansive. Misleading sales histories are just a straw in the wind blowing through the domain of endless joy. Buyer, and seller, beware.

This article was first published in the print edition of The Saturday Paper on December 14, 2019 as "Price and prejudice".

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Chris Nash was professor of journalism at Monash University, and a Walkley Award-winning journalist at the ABC.

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