By Guest Blogger, Terry Ryder, founder, hotspotting.com.au and propertyU.
Anyone disturbed by the recent 60 Minutes report on the housing market, which predicted major decline in property values, needs to consider the following:
- The producers of 60 Minutes did not conduct research and interviews and then reach conclusions about the state of our property markets. They decided in advance to concoct a sensationalist story about collapsing markets because they thought it would be good for ratings, then went looking for commentators willing to make negative comments.
- I know this to be true because a 60 Minutes producer phoned me to ask for an interview. When I told him I did not agree with his pre-conceived headline, he quickly terminated the phone call and no interview took place.
- Two of the main sources featured in the 60 Minutes program, Louis Christopher and Martin North, have both claimed that their views were distorted by selective editing and that the program misrepresented their views.
- Significant numbers of credible, independent commentators have criticised the story as sensationalist, unbalanced and unsupported by research evidence.
- The ABS TV program Media Watch has criticised the 60 Minutes segment for setting out to create a sensationally negative appraisal of the property market without undertaking proper journalistic processes and for failing to include alternative viewpoints, such as those expressed widely in other media in the week following the 60 Minutes broadcast.
- Over the past 15 years there have been numerous instances of individuals predicting price decline in Australian real estate as big as 40%, 50% and 60%. Many have been overseas spruikers visiting Australia for book launches or seminar tours and seeking publicity for their events. Others have been maverick economists such as Steve Keen. All have forecast that the predicted decline in values would occur in the next 12 months or two years. All of them have been spectacularly wrong.
- American doomsday forecaster Harry S. Dent has visited Australia three times in the past seven years and, each time, has predicted massive decline in our property values in the next 12 months. He has been wrong each time.
- Australia has never had property price decline as big as that predicted by 60 Minutes segment. In the wake of the GFC, a small number of nations experienced major property downturns, but none has recorded value declines as big of 40%.
- The overseas experience has demonstrated the conditions needed for property values to fall 15% or 20% - a severe economic recession, double-digit unemployment, massive over-supply of dwellings across the nation and very lax lending practices. The combination of those factors caused the US market to fall in the wake of the GFC, but nowhere near as much as 40%.
- Australia does not have any one of those conditions in place, let alone all four.
There is evidence of some value decline in some sectors of the Sydney and Melbourne markets recently. The decrease in prices in some sub-markets has been orderly and relatively minor.
History shows that this is the normal process following a prolonged up-cycle. Most respected, independent analysts are expecting minor price correction in selected markets - and that is what we are seeing in our two biggest cities.
At the same time, some sectors of the Sydney and Melbourne remain strong, with busy sales activity and solid price levels, particularly locations at the more affordable end of the market, boosted by first-home-buyer activity helped by government incentives.
Equally, there are capital city markets and key regional centers where sales activity is buoyant and property values are rising. Hobart and Canberra are both recording strong growth, while Perth is clearly entering a recovery phase and both Adelaide and Brisbane are showing promise of increased growth rates.
Regional areas such as the Central Coast, Wollongong and Newcastle in NSW have recently recorded strong price growth and continue to have elevated property markets. In Victoria, Geelong, Ballarat and Bendigo have all experienced surging market activity, with prices currently rising strongly.
There is also considerable uplift in regional Queensland markets such as the Sunshine Coast and Mackay.
Sadly, this kind of truthful analysis based on research is largely absent from mainstream media. Real estate consumers are advised to ignore the sub-standard reporting in our newspapers and TV shows and instead speak to credible professionals at the coal-face of the housing industry, such as Rich Harvey of propertybuyer, to learn what’s really going in our key markets.
Call propertybuyer today on 1300 655 615 to tap into our market perspective and identify the right areas for your next investment.
Click here to make an enquiry.
