The main reason I started these good news bulletins 2-3 months ago was because mainstream media was obsessing with negativity, including doomsday forecasts on real estate markets.
The usual suspects – the people who always talk down property – seized the opportunity for a bit of free publicity.
They included the nation’s gaggle of chattering economists – the people who constantly get it wrong with their forecasts, but keep showing up in media every other day making yet another prediction which will be later proven to be wide of the mark.
Now, almost four months after the impacts of the pandemic were first felt in Australia, the usual suspects are lining up to water down their earlier, erroneous, forecasts.
And that’s because they predicted property prices would collapse – with falls of up to 30% or 40% – and of course nothing of the sort has happened.
There is, in fact, no evidence at all of any major decline in house prices in Australia.
So now many of the so-called analysts are retreating from their previous, super negative, housing forecasts.
In one of the latest revisions UBS analysts have softened their forecast of house price falls – in March they predicted 20% but now they’re suggesting somewhere between 5% and 10%.
AMP chief economist Shane Oliver this week also pulled back from earlier predictions of a 20% plunge and is now forecasting a more moderate house price dip.
Let me tell you, Shane Oliver has the worst forecasting track record of any economist in Australia. He never gets it right – largely because he’s always overly pessimistic and real estate keeps doing better than he thinks it should – but primarily because he just doesn’t understand real estate.
Oliver should stick to what he knows best, which is getting it wrong on the economy, and leave real estate to the experts.
Another of the positives emerging in real estate, is that vendors are becoming more confident and are increasingly willing to put their homes on the market.
The number of homes on the market jumped by 11% in Sydney and Melbourne in May, according to SQM Research.
And other research has revealed a “surprising response” to that rise in listings recorded over the month of May.
According to research by CoreLogic, there has been strong absorption of new listings over May, with prospective buyers keeping a close eye on Australia’s property market.
Eliza Owen, head of research Australia at CoreLogic says: “COVID-19 has brought about downside risks for the economy and housing market …
“But one surprising sign of stabilising emerged in May. Home sales have risen, with home owners testing the market, and new listings are rising.
“In fact,” she says, “buyer demand is outweighing the volume of new listings.”
The strong absorption of new listings over May can be observed across new and total listings data, she says.
“In the 28 days to 31 May, new listings rose 22.4% on the previous period, but total listings fell -2.9%. This means that, even as more new stock came onto the market, buyer activity offset the additional stock.”
Now, I’m sure everyone is aware of the new $700 million Fed Govt scheme – that’s $700 million if they got their sums rights this time – to offer $25,000 grants to people to build a new home or start a major renovation.
The temporary scheme that will last until the end of the year – unless they break their promise, god forbid – and has the goal of building 30,000 homes by Christmas.
It’s been estimated by the HIA that this will create economic benefits totaling around $15 billion.
It was reported that people were out buying land even before the Govt made its announcement, because of course it was foreshadowed in media articles because it became official.
It was suggested that inquiries in some regions had tripled over the weekend before the announcement.
Jamie Martin, sales manager at Providence South Ripley in south-east Queensland, said he had “never seen anything like it”, as people lined up over the weekend to secure a block of land.
He said: “We’ve seen visitor numbers double overnight and our traffic over the weekend tripled.
“Buyers are wanting to get a foot on a block in anticipation of the announcement. People aren’t sitting on their hands. It’s a land frenzy.”
Sounds like a real estate sales person, does it not?
But there’s little doubt that this create plenty of activity in the real estate industry – and will stimulate building activity, which means more people will have jobs.
Now, here’s some more good news for people wanting to get into the market.
According to the REIA’s Housing Affordability Report, the proportion of income required to meet loan repayments has decreased by 1.0 percentage point to about 34%.
Housing affordability improved across the states and territories in the latest quarter, with the Australian Capital Territory having the largest improvement of 1.1 percentage points.
REIA president Adrian Kelly says rental affordability also improved in the quarter, with the proportion of income required to meet rent payments decreasing to 23.5%.
And, just repeating news I brought you earlier, according to figures from SQM Research, house prices rose nationally 1.1% in the past month, with increases recorded in Sydney, Melbourne, Perth, Adelaide and Canberra.
Providing further evidence that all those forecasts of property prices falling off a cliff were sensationally wide of the mark –
… which is why, as I said at the start of the broadcast, so many of those forecasters are now retracting their earlier predictions and replacing them with ones that are a little more positive and realistic.
