Property Prices To Crash 40%?

The recent 60 minutes 'Bricks & Slaughter' story is further proof that you can't rely on mainstream media for reliable, balanced input into the Australian property market. I feel sorry for Mum and Dad investors that will lose sleep over these sorts of stories, and I feel terrible for the experts that were featured in this story but had their comments 'cherry picked' to reinforce the shows goal to hype up fear that the Australian property market was about to crash.

Here's what they really said...

- Louise 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)

- 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% would require a global financial crash - GFC 2.0. (FULL STORY)

Why let the truth get in the way of a headline that grabs attention!

This is not the first time the attention seeking headlines have been used to 'Sell Books' or get viewers to tune into a TV station desperate to gain ratings.

- In 2016, 60 minutes stooped to new lows featuring a US Macroeconomic Researcher, Johnathan Tepper,  who just happened to be in Australia promoting his book tour, claiming the Australian property market was about to crash by 30% to 50%. Like many Australians I tuned into that program keen to see how he could justify such claims only to find his one and only location example used to prove his concept was to feature the remote mining town of Moranbah, perhaps the most hardly hit location from the mining industry collapse.  I was left shocked that 60 minutes had become that desperate to grab views through sensationalised headlines with very little to back it up.   

- In 2014, US author Harry Dent grabbed media attention (and subsequently sold lots of books) when he predicted Australian House prices were about to fall by at least 27%. Of course the opposite has since happened. During this time I was asked to tour with a small group of industry experts, which included Harry Dent, where we each spoke to large audiences about our thoughts on the Australian Property market. Also amongst the speakers was Mark Bouris, who shared my opinion that the Sydney and Melbourne markets were very solid and were in the midst of a solid growth faze. 

- In 2010, Australian controversial economist Steve Keen proclaimed Australian property prices would fall 40% in a year. In fact, based on his concerns, he sold his house in Sydney only to see the market boom and values double. At the time Keen lost a public bet he made with Rory Robertson, a Macquarie Bank analyst, and had to walk 15km from Parliament House in Canberra to Mount Kosciuszko wearing a t-shirt that read "I was hopelessly wrong on house prices - ask me how".

But is the sky really going to fall this time?

The simple answer is no.

The Sydney and Melbourne markets are in a correction phase, but we see this every time these markets pass their peak. I've made it my personal mission for years to educate investors on how 'C Grade' investors push market cycles in each postcode to reach peaks that are above the fundamental values of there local market. As a result there is commonly a small adjustment that happens in the years that follow a peak period. This adjustment often results in house prices stabilising 10 -15% below the peak market value, these prices remain fairly constant until the next growth cycle creates an uplift phase again.

Whilst this is normal, any property value adjustment in a negative direction is all the 'scare mongers' will need to justify their doom and gloom theories. 

Don't let good news get in the way of a bad story

It seems 60 minutes had no intention of telling a balanced story about the Australian property market, instead opting to 'cherry pick' the worst comments and statistics they could find whilst carefully omitting anything positive that took away from their sensationalised negative headlines. And as a result thousands of Mum and Dad investors will miss out on markets that are now entering the start of the growth periods that Melbourne and Sydney have enjoyed over the past 4-5 years.

For example, whilst Melbourne and Sydney cycles are passing their peaks, the South East QLD property market is gaining momentum due to a massive swing in migration trends, huge infrastructure investment creating thousands of jobs, plus affordable properties that offer double the rental yields at half the property price compared Melbourne and Sydney. (FULL STORY)

The 'Next Boom' is here!

Over the past 12 month there are a number of new 'Boom Markets' that have replaced the Sydney and Melbourne markets. In Brisbane alone were over 25 postcodes that have recorded double digit price growth as South East QLD enters it's growth phase. Underestimating the growth potential of this sector could prove to be a huge opportunity cost to investors distracted by negative press and uninformed observations of the way the Sydney and Melbourne property markets cool off and settle back into slow growth (or no growth) phases over the coming years.

If you would like more details about my view on the Big Property Shift that plays heavily in favour of the South East QLD property market, here's a link to my latest report: Click Here.