It's the time of year for property forecasts isn't it?
So if our economists are armed with all the research available in today's information age, why can't they agree on where our property markets are heading?
In fact, a better question would be - why do so many get it wrong?
That’s what I discuss in today’s Property Insiders chat with Dr. Andrew Wilson, Australia’s leading housing economist.
The simple answer is that market movements are far from an exact science.
It's more than just fundamentals that move markets.
The fundamentals are easy to monitor.
Things like population growth, supply and demand, employment levels, interest rates, affordability and inflationary pressures.
- Also read:Boom to bust: What makes property prices rise and fall
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Sydney property market forecast for 2024
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 28th, 2023
- Also read:The Boom and Bust of our Property Cycles: A Journey Through the Investor’s Mind
However, one overriding factor that the experts have difficulty quantifying is investor sentiment.
Another issue to understand is that many of those giving forecasts has a vested commercial interest.
Be careful who you listen to
Just looking back over the last few years many commentators were predicting higher interest rates – but the exact opposite happened.
Of course, at the beginning of 2019 many property commentators were predicting real estate Armageddon, yet in the second half of the year the property markets turned around and regained a lot of their lost momentum and those who listened to the property pessimists would have missed out.
The bottom line
Property is a long-term game, don’t look for “what works now.” Instead look for “what has always worked.”
Remember this year’s hot spot is likely to become next year’s not spot, so buy and invest in the type of areas that have exhibited long term capital growth and will continue to do so over the long term.