September 2018

60 Mins Puts Property Experts Into Damage Control

60 minutes ran a highly sensational story last Sunday night on the property market. The experts who participated had to move straight into damage control and sheepishly clarify that their comments were taken out of context.

Lets have a quick look at the culprits...

  • Martin North (Digital Finance Analytics) stated that they took the worst case from his four scenarios, which is not his central scenario. He said that a fall of more than 40% in home prices would require a GFC 2.0 (10 years or so after the original one). Full story
  • Louis Christopher (SQM Research) said that his interview spanned 45 minutes, of which approximately one minute was featured in the segment. "I was disappointed and unhappy and have decided to only work with trusted reporters to put forward any messages". Full story

On Tuesday Stephen Koukoulas (The Kouk) issued a public challenge to Martin North, stating that it is easy to construct a headline grabbing forecast, and offered North 6 to 1 odds ($15,000 to $2,500) that house prices anywhere will not fall by more than 35 per cent from their peak at any stage before and up to the December quarter 2021. North declined to participate. Full Story

Simon Buckingham (Sophisticated Property Investor) reminded me that the doomsday merchants are always lurking...

  • Back in 2010 economist Steve Keen lost a bet with Macquarie Bank that house prices would fall 40% in a year and had to walk from Canberra to Mount Kosciuszko wearing a t-shirt that read "I was hopelessly wrong on house prices - ask me how". Full story.
  • In 2014 and 2015, US author Harry Dent was on the scene forecasting housing prices to fall in Australia by at least 27%. In fact the exact opposite happened and they grew substantially during that time.
  • In February 2016, '60 Minutes' featured US 'macroeconomic researcher' Jonathan Tepper predicting that Australian property prices would crash by 30% to 50%. During this period the markets actually boomed.

Seems to me that these individuals are more about raising their profile (and selling books), than providing a balanced summary of the real estate market place.

On the other hand one of the more credible analysts, Moody’s Analytics paints a less gloomy picture of housing markets over the coming years. While, growth is forecast to be subdued relative to previous years, the forecast is for a relatively mild downturn, with national house and unit values returning to mild positive annual growth by the middle of 2019. Full story.

Let me repeat that - mild positive annual growth by the middle of 2019. That's next year!

This is what the bottom of the market feels like! Don't be fearful - get excited as there are terrific buying opportunities to be had. And it may not last as long as you think.