How the news and mainstream property predictors have it so wrong!

Experts predict heavy and long-lasting house price falls!!! Why the doom and gloom of the news are so INCORRECT!

"House prices could fall by as much as 25 to 30% in the next two or three years." Gerard Minack, Chief Equity Strategist, Morgan Stanley

"The price of Australian homes could fall by up to 40% over the next few years." Dr Steve Keen, University of Western Sydney

"It seems likely that houses prices will follow the UK experience." AMP chief economist, Shane Oliver

These forecasts were made back in 2008 when the Sydney median house price had just reached half a million dollars. They were accompanied by near hysterical media claims that housing prices had “risen too quickly”, were “unaffordable” and that they were “unsustainable”. Many experts were predicting a sustained period of severe, even brutal price falls.

But what actually happened? We now know that the exact opposite occurred, with Sydney’s house prices doubling over the next ten years, to reach one million dollars.

Experts predict heavy and long-lasting house price falls again!!!

Yet once again the prophets of ignorance are predicting doom and gloom for our housing markets and amazingly, they’re trotting out the same reasons of unaffordability and unsustainable growth that they used to scare us back in 2008.

Despite their cries to the contrary, there is only ONE reason why prices have fallen in Sydney and Melbourne and why they have stalled in the other States. That is simply because housing buyer demand has been completely stifled with a self-induced squeeze on housing finance by the big banks.

This is why the doom and gloom experts are so wrong – they are economists who look at the relationship of supply and demand – they know that when demand falls, prices tend to follow. But they are confusing buyer demand with housing demand, which are two totally different things. Demand for housing is caused by population growth, especially by people coming from interstate or overseas, who need a place to live as soon as they arrive. So, while the big banks have temporarily put the brakes on housing finance, the demand for housing continues without any pause, with more and more people in the big cities forced to rent rather than buy.

This is why the experts are getting it all wrong – again!!!

The experts think that housing demand is falling, but it isn’t – it is quite clearly rising, and the only reason that housing prices aren’t following suit is because the banks are not lending enough.

In fact, with record high population growth, sustained economic growth, record low-interest rates and record unemployment levels, what we are experiencing right now is like a giant pressure cooker, and once the banks free up their lending, prices will shoot up again.

Where are our housing markets heading in 2019 and beyond?

The buyer demand that caused prices to rise dramatically in Sydney and Melbourne was well underway in Tasmania and just starting in Brisbane when a combination of events stopped demand in its tracks. My prediction is that buyers will soon pick up where they left off.

If your keen to know where the current hot spots are and ones coming up in 2019, book in a 15 minute chat or DM me to set up a time.

Happy New Year!

Devan