Media has gone overboard on the forecast by the Commonwealth Bank that property prices across Australia will fall 10% in 2024.

As consumers, we can rest assured that it won’t happen - because the people making these forecasts have a track record of getting it horribly wrong in their property market predictions.

There are two major things wrong with the media treatment of forecasts like this:-

One is the speed with which media turns a forecast into a fact. It’s not a case of someone forecasting that prices may fall 10% in the future, but it’s presented as: prices WILL fall 10%.

The second is that journalists never check on the forecasting record of the people they’re publicising. If they did, many high-profile forecasters would never appear in media – because they constantly get it wrong.

The Commonwealth Bank’s latest prediction on prices comes from the CBA’s head of economics, Gareth Aird.

Media assumes this is credible because it comes from one of the Big 4 banks and CBA is our biggest mortgage lender. They must know what they’re talking about, right?

Well, actually, NO.

Based on his track record, Gareth Aird is one of the nation’s worst forecasters.

Let’s look at what he predicted in March 2020 as the pandemic first took hold.

He forecast that residential property prices would drop 10% over six months and 20% in the next year, led by steep falls in Sydney and Melbourne.”

BUT in the next 12 months house prices overall rose 7.5%, with Sydney up 8%, Adelaide 9%, Hobart 13%, Canberra 14%, Darwin 16% and Regional Australia by an average of 13%.

Now, let’s look at his forecast at the start of 2021.

In February 2021, Gareth Aird on behalf of the Commonwealth Bank, was forced to admit they’d got it seriously wrong a year earlier and were now predicting price rises.

But their forecast was: House prices will rise 9% in 2021 and unit prices will rise only 5%.

What’s actually happened? House prices have risen 21% and unit prices 13% in the first 10 months of the year alone.

Once again, they’ve underestimated housing markets across Australia. And they continue to discuss Australia as a single unified market, without allowing for many regional differences.

Let’s face it, Gareth Aird would struggle to accurately forecast what happened yesterday.

And why does this failed forecaster think prices will fall in 2024? Because he expects interest rates to rise and this will generate a big drop in prices.

This, I have to say, is kindergarten analysis. Simplistic, misguided and plain wrong.