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The September Cliff Theory - June 2020

By Guest Blogger, Terry Ryder, founder,

hotspotting.com.au and propertyU


When the impacts of Covid-19 first became apparent in February and March, economists began predicting a collapse in real estate prices.

The people I call “the usual suspects”, the economists and independent ranters who always talk down property, began tipping house prices would fall at least 20% and some suggested even 30% or 40%.

Journalists, being the shallow creatures that they are, lapped it all up and rushed to print with sensationally negative headlines, without applying any scrutiny to the forecasters and their motives.

Three months later, some of those forecasters are retracting their earlier predictions. Shane Oliver of AMP Capital, always eager to be a real estate pessimist, recently recanted his 20% decline tip and suggested a more moderate outcome.

The boffins at UBS, who seldom see anything positive in real estate, recently admitted they’d got in wrong and that housing markets were holding up a lot better than they thought.

But now the diehard doomsdayers have found a new catastrophe to obsess over: the September cliff.

The theory is that come the end of September, the banks and the federal government will flick a switch and stop supporting Australia.

The trigger here is that JobKeeper is scheduled to run until then and the banks have put a similar deadline on their extension of mortgage payment holidays to borrowers. So, when the government and banks switch off their support, everything will fall off a cliff. Theoretically.

It’s a convenient scenario for pessimistic economists (is there any other type?) and journalists with a negative mindset (there is definitely no other type).

But there are serious flaws in the theory, and I feel confident in suggesting that is simply won’t happen. There will be no cliff for prices to fall off in three months’ time.

Here’s what’s wrong with the “September cliff” theory: - 

  • It assumes that everything depends on JobKeeper and mortgage holidays. It doesn’t – there’s a whole lot more in the mix.
  • It assumes the Federal Government will simply switch off support in September. They won’t.
  • It assumes banks will shoot themselves in the foot by abandoning their customers. They haven’t come this far in supporting their borrower’s customers to abandon them later.
  • It assumes that nothing will change with business and employment between now and 30 September. But a lot is changing already, with restrictions easing, businesses re-opening and jobs re-appearing.
  • It overlooks the extraordinary level of stimulus measures in play. Multiple booster measures from all levels of government have been activated and there is a lot more to come. A $72 billion spend on infrastructure provides a prime example of the measures that will generate economic activity and jobs. The $25,000 grant for people to build homes is already generating activity that has surpassed expectations.
  • It overlooks the impact of the ongoing easing of restrictions. Before we get to the doomsday deadline, state borders will be open, and tourism will be pumping again. Australia are revelling in the new freedoms and this will help revive economies.
  • It overlooks the news that people who sought mortgage holidays are rapidly moving back to making mortgage payments. ANZ said in mid-June that a third of the customers who sought a holiday are already back making payments.
  • It ignores the extraordinary resilience of real estate markets, which have a history of not only resisting economic downturns but leading national economic recovery.
  • It forgets the natural boost to real estate markets from the Spring selling season.


The “September cliff” theory will be forgotten even before we get to September. The people who made those forecasts will have forgotten they made them. For most of the talking heads, it’s nothing more than a soundbite, a publicity opportunity. Many of them don’t even believe their public statements.

It will join an already-long list of predictions that have been proven false since February. Every statistic that has been published to date – whether it be property prices, auction clearances rates, vacancy rates, retail spending, unemployment figures and GDP numbers – has been less dramatic than the media forecasts.

It’s time we stopped listening to the attention-seeking economists whose only objective is to gain media profile by feeding the 24-hour news cycle, with little regard to the consequences.


If you are considering buying a property during 2020, it may well be a short window of good opportunity to buy well while the volatile forecasts create negative sentiment. It’s important to speak to those professionals like propertybuyer who are at the coal face of the property market watching buyer and vendor sentiment on a daily basis and give factual insights at a local level – not based on a national statistic that could be meaningless.


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