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Avoiding Media Misinformation

If you’re someone who wants to understand what’s really going on in real estate markets around Australia, here’s the key thing you have to do:

When data on the property market is published, get a copy of the actual report.

Don’t read what the media says is in the report. Get a copy of the report itself.

In most cases, the reports – from research entities like Domain, SQM Research and CoreLogic – are free and easily accessible.

And when you look at the data in many of the reports on prices, you will notice the stark differences between what the reports say, and what the media claims the reports say.

The sad reality is that the key messages on property market data are being distorted in two main ways.

Firstly, the organisations who publish the data. Often, their primary motivation is to achieve media profile. Their motivation is NOT to help you as consumers or to provide you with good information.

They simply want to use their data reports to achieve free publicity for the company to advance their business. And that motivation distorts the message they put out, because they know that bad news sells, in terms of what the media wants.

The second way the messages are warped is that media very often will accentuate the negatives and create sensationally negative headlines in their search for clicks.

As an example, the latest statistics show that house prices continue to rise in 12 of the 15 market jurisdictions (8 capitals and 7 state regional markets) across Australia.

But the headlines claim prices are falling across the nation.

The CoreLogic media release on 1 June highlighted the few places where prices are falling, allegedly, and largely ignored the significance of the fact that most market jurisdictions still have rising prices – in many cases, very strongly rising prices.

The latest “pain and gain” report shows that the vast majority of vendors are making strong profits when they sell, compared to what they originally paid for their properties.

And the rate of gain has increased in most market jurisdictions. In 10 of the 15 market jurisdictions, property sales in the latest quarter were MORE profitable, more often, than before.

Yet media reports tell us that the rate of gain has dropped.

So, even when the data is overwhelmingly positive, businesses publishing the information will emphasise any negatives in the figures in their media releases because they believe that this will maximise their chances of free publicity.

Media organisations will happily go along with that approach and highlight any negatives that are available.

It means that Australians consumers are being misinformed regularly about housing markets.

And the forecasts published by economists suggesting that big drops in prices are coming, are exacerbating the problems.

Media will always accept, without question, a forecast that prices will crash – even though predictions like this have been common in the past and have always been wrong.

Remember two years ago, at the onset of the Covid pandemic, the same economists forecast a collapse of property prices – but instead we saw a nationwide property boom.

Fortunately, a survey by the comparison website Finder indicates that most Australians are ignoring the pessimistic headlines.

The survey finds that very few consumers think property prices will fall in the next year.

Despite daily media articles declaring that property prices are set to fall 15% or 20% or more, most Australians don’t believe it, according to the latest Finder Consumer Sentiment Tracker, which sought consumers’ views on the direction of house prices in the next 12 months.

Even in Sydney and Melbourne, where some economists and commentators have declared prices to be falling already, only about 20% of consumers believe prices in their local area will fall in the next 12 months.

In Sydney, 50% believe prices will rise and another 28% suggest there will be no change.

In Melbourne, 56% expect property prices to increase and 25% expect them to stay the same.

Consumers are even more bullish about house prices in Perth, Adelaide and Brisbane.

In Brisbane, 63% expect prices to rise and 23% expect no change. Only 14% expect prices to decline. In Perth, 58% expect price increases and 29% foresee no change to house values. Only 13% expect prices to fall.

It seems to me that Australians have seen so many doomsday forecasts about house prices in recent years and realise that they’ve all been wrong.

And now they’re understandably sceptical about the latest predictions – by the usual suspects – about property prices crashing.

So, the secret to achieving a good understanding of what’s happening in markets, is to ignore the failed forecasters and avoid reading what media says is in the price data reports.

Instead, get a copy of the price reports themselves and see what the figures actually say.


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