Why do most Property Commentators get it wrong?

If we go back over the past 7 years and look at the YouTube videos of Property Commentators, we can see that most get it wrong. There are some notable exceptions to this of course, that nearly always get it right.

So what is the difference?

Those Property Forecasters who get it wrong regularly tend to have an overly pessimistic or naively optimistic presentation. The pessimists are constantly predicting doom for the market, regardless of the current stage of the Property Cycle. Unfortunately, these naysayers tend to get a lot of media attention when the property market is going through the correction phase of the cycle. Hence we saw articles by these doomsday specialists predicting a 40% crash in property prices being highly profiled.

On the other hand, the 'over the top' optimists show a lack of experience and judgement with property forecasting. Their presentations are usually characterized examples such as rolling out features on very young couples on Social Media, including statements like, "this couple are only in their twenties and have created a 5 million dollar property portfolio in just 3 years, it's easy, so why aren't you doing it?" These commentators try to create a picture of property investing which removes all the obstacles and challenges that need to be dealt with by the successful investor.

With these two extremes, we can see that both have an emphasis on appealing to the emotions of people, and this can influence the market by appealing to investor sentiment. So the Property Market can be affected by issues other than pure economic data, such as FOMO, the fear of missing out. In the upstage of the Property Cycle in Sydney and Melbourne, some people can make property buying decisions because of this fear of what they think they are going to lose if they don't get in now. Property forecasters need to take into account these psychological factors when predicting how the market will perform over the next 12 months.

This is partly why the role of APRA is so important in helping to prevent Property Bubbles from getting out of control, particularly in the Eastern states.