A number of commentators and analysts have labelled 2023 as an “extraordinary” year in real estate.
One called 2023 “the year that surprised everyone”.
Who are these people? They’re the economists (like the ones who work for the big banks and for organisations like CoreLogic and AMP Capital) who got it wrong with their forecasts on what property prices would do this year.
And rather than admit their mistake – and indeed their ongoing incompetence in this area – they have tried to write it off as an aberration, an outlier, a year that nobody expected.
And in that regard the economists are wrong, yet again.
Many of the specialist real estate analysts – like the team at Hotspotting – DID foresee the year that occurred in 2023 and correctly predicted that we would see moderate to strong price growth in most, but not all, markets across Australia.
The year that unfolded was pretty much exactly what Hotspotting forecast at the start of 2023.
Our broadcasts and writings in late 2022 and early 2023 predicted a year of price growth, but not a boom year.
One example was the annual real estate featured published by Money Magazine in February each year, written by Hotspotting managing director Terry Ryder.
Here’s what I wrote in that feature at the start of 2023:
No one is forecasting rises like we saw in 2021, when the national average was an increase above 25%. Rather, most analysts are suggesting moderate growth. That’s certainly how we see it at Hotspotting.
The failed forecasters working for the big banks, CoreLogic and elsewhere got it wrong and told us prices would fall at least 15% – because they fundamentally do not understand residential real estate.
They believe interest rates are the over-riding factor.
Here’s what the economists at CoreLogic wrote recently: “It’s pretty extraordinary to see values get to a new record high despite further uplifts in the rate-hiking cycle.”
The reality is that there was nothing surprising or extraordinary about the results of 2023.
Real estate showed its usual resilience because there were bigger factors in play than interest rates, notably an oversupply of demand and an undersupply of properties for sale and for rent.
It’s not rocket science. You could teach this to primary school children – but I seriously doubt you could ever teach it to an economist.