Credible analysts, increasingly, are making forecasts for Australian property prices which contradict the sensationalist and alarmist predictions we have seen from media in recent months.
More and more sensible commentators are suggesting that any post-boom correction in residential property prices will be moderate and that many locations will continue to deliver solid growth.
They are also commenting that the general media theme that rising interest rates cause property markets to collapse is unreasonable and not based on historical precedents.
Australian consumers interested in the housing market can be forgiven for not being aware of this, because professional analysts making sensible, well-researched forecasts about prices are not receiving the same level of media coverage as those who are predicting a spectacular collapse in prices.
No surprises there. In Australia, mainstream media loves to cause fear and alarm, and doesn’t care too much about accuracy or fairness. And they’re certainly not interested in helping consumers or providing information that is useful to us.
Let’s face it, there are a number of high-profile individuals and businesses out there who simply crave media profile, either for reasons of ego or because they think constant publicity is good for their business.
They know that journalists are more likely to give them free publicity if they say something sensationally negative than if they present calm, sensible, reasoned viewpoints based on quality analysis.
Until recently, the most constant source of negative analysis about housing markets has been CoreLogic, which seems desperate to generate daily publicity.
Media tends to treat CoreLogic as the definitive source of information about prices and the direction of property markets, when in reality it is one of many research businesses with data about prices – and often other sources have different figures and analysis to that provided by CoreLogic – but journalists don’t seem to realise that, or care.
Businesses that calmly and professionally publish property data, like Domain, SQM Research and Propertyology, don’t get nearly as much media publicity.
But now there’s a new kid on the block, desperately competing with CoreLogic for media attention.
The new media tart is PropTrack, which is part of the REA Group which owns realestate.com.au.
PropTrack is pumping out press releases with sensationally negative analysis, if you can call it analysis, and predictions – because the prime objective is to achieve free publicity, NOT to inform the public with useful information.
When that’s your motivation, the message gets distorted.
There are also the other regular media tarts like Shane Oliver of AMP Capital and the senior economists at the big banks, who are also chasing daily publicity and happy to forecast real estate disaster if that’s what it takes to get in front of the cameras.
So the media airwaves are increasingly clogged up with strident headlines and noisy soundbites declaring that property markets are collapsing and that prices will plummet, nosedive or fall off a cliff.
BUT, there is hope.
More and more analysts – the real ones who have genuine credentials in understanding how real estate markets work – are stepping up and contradicting the sensation seekers.
Simon Pressley of Propertyology is one of the best real estate analysts in the nation and he publishes quality analysis of Australian property markets – pointing out, among other things, that the last time Australia experienced a period of repeated interest rate rises, from 2002 to 2008, property prices rose strongly across the nation.
And interest rates were much higher back then.
He also emphasises one of the key factors underpinning Australian property values, the serious shortage of dwellings which is reflected in record low vacancy rates and rising rents.
Another experienced and respected property market analyst is Michael Matusik, publisher of Matusik Property Insights, and someone with decades of experience in sensibly analysing markets without constantly seeking media attention.
His analysis indicates that house prices overall are still rising, though not at those boom-time rates we saw in 2021, and his forecast for the year is a 1% fall in the nation’s median house price.
Yes, that’s just 1%, not the dramatic falls of 15%, 20% or 25% that the usual suspects are claiming.
James Kirby, Wealth Editor at The Australian, has pointed out that, despite all the strident headlines, capital city values have fallen by only half of 1% this year according to some sources and says:
“Reports of a housing price collapse have been greatly exaggerated.”
He points out that the only reversals seen to date are in parts of the Sydney and Melbourne markets.
Kirby also says that those who predict a 20% price drop will be proven wrong and investors who wait for big price falls will be punished, because they will miss the best opportunities to buy well.
Experienced real estate economist Nerida Conisbee says there is very little evidence that the market will see a sharp correction in prices.
Conisbee says: “I don’t know where these forecast declines are going to come from. The conditions are just not in place for the sort of house price declines that people are publishing.”
And here are some comments from Emmanuel Datt, fund manager at Datt Capital:
“Honestly, I think many of the forecasts out there on house prices are nothing short of ludicrous.”
I wholeheartedly agree.
The Reserve Bank, also, has criticised the people making the alarmist forecasts which, I would remind you, are similar to the forecasts made by the same people early in 2020 when Covid first appeared in Australia – and of course they were all spectacularly wrong back then as well.
I would also point to the number of analysts stepping forward to declare that interest rates will not rise as high as the media generally is forecasting.
And there are growing numbers of experienced property industry participants forecasting that property prices will rise in 2023 for a host of reasons, including
- the return of overseas migrants in large numbers,
- the end of interest rate rises and the possibility that rates may actually fall next year, and
- the serious shortage of dwellings in Australia, exacerbated by the number of big projects that are being cancelled or deferred because of rising construction costs.
I agree with those forecasts.
I’ve been analysing sales activity across Australia and I’m finding very little evidence of decline in buying activity or prices.
Quite the opposite, in fact.
In many markets across Australia, the most recent quarter has shown a pickup in key markets and the possibility of price growth continuing.
So, tune out the media white noise, and just get on with it.
If you’re thinking of buying, don’t let the attention-seekers in the media stop you.
