Why do so many property experts have difficulty predicting the market and why do they keep getting it wrong?
The property market always seems to evoke strong and conflicting opinions.
Many so-called experts have been predicting for years that Australian house prices will crash, but so far they’ve been wrong. Yet there are others who believe that our housing market is underpinned by the strength of our economy, a booming population and low interest rates. In today’s information age our economists and property experts have available to them unlimited online information and access to so much data and research and yet there is still no consensus about where the market is heading. Why is this so? When you look at the property market fundamentals they are clear and easy to monitor. Some of the main drivers of the market are supply and demand, employment levels, population growth, interest rates and affordability.
However there is one key element that experts have difficulty assessing; this is the investor psychology and consumer sentiment. Because this is an emotional dynamic it’s hard to measure and also hard to assess the impact it has on the market. That’s why predicting property price movements is far from an exact science. The resilience of our property market over the last two decades has baffled many market pessimists who have been predicting the collapse of the Australian Housing market.
A little over a year ago U.S. Demographer and author, Harry Dent, predicted an imminent catastrophic collapse of up to 50% in the Australian property market. At about the same time SQM research analyst, Louis Christopher had a more optimistic outlook about the market and he accurately predicted a 20% growth in the Sydney market.
If you followed Harry Dent’s advice you would have regrettably either sold in a panic or stayed out of the market. But if you followed Louis Christopher’s advice and invested in property, today you’d be very happy, having been rewarded with strong capital growth.
Despite the negative headlines of boom and bust, we are living in a politically stable, resource rich and financially sound country which is under pinned by demand from a booming growth in population.
Australia is seen by the rest of the world as a safe place. Currently money is pouring in from foreign investors from all over the world as they look for a safe haven to invest their savings.