Negative Forecasts

There are lots of negative forecasts in news media about property prices in 2024, but if you own real estate or are planning to get into the market, do not be alarmed. At this time EVERY year, media is awash for pessimistic forecasts for real estate prices. And most of the time they are proven wrong by subsequent outcomes. Remember when Covid struck early in 2020? Media reports abounded with forecasts that house prices would collapse. But they didn’t – prices rose in 2020. At the start of 2021, most forecasters agreed prices would rise that year, but only 5 or 6 percent. But by the end of the year, house prices had appreciated by an average of 25%. At the beginning of 2023, we were told by bank economists and media commentators that prices would drop at least 15% – because interest rates were rising. And yet again, they were not only wrong, but spectacularly wrong. Prices have grown in most markets across Australia, including price rises above 10% in some cities. So, as we head in 2024, the usual suspects are popping up with their price forecasts – and, you guessed it, they’re mostly pessimistic. And news media is happy to publish them, despite the dreadful track record of so many of the forecasters. Essentially, journalists don’t care about the credibility (or lack of it) of the commentators – anyone willing to stand up and declare that prices will collapse, or plummet, or nosedive, or fall off a cliff, is guaranteed lots of free publicity. Which is why the people putting out press releases usually make NEGATIVE forecasts with dire warnings about real estate matters – they know a screaming negative is the shortcut to a high media profile, content in the knowledge that no journalist in Australia will ever challenge them about getting it wrong all the time. An example of the mindset of the average journalist, and how it translates into misinformation for Australian consumers, is provided by media reaction to the Boom and Bust report published in November each year by experienced analyst Louis Christopher of SQM Research. Each year, this report presents four different scenarios to forecast what might happen with house prices in the coming year. Each scenario assumes different outcomes with interest rates, inflation and unemployment, with various price predictions for each different scenario. Journalists, being the sad, pathetic creatures that they are, will always zero in on the most negative of the four scenarios, and make that their story. So headlines have been screaming that prices will fall in 2024 in the big cities. It’s worth noting that the Boom and Bust report a year ago had fairly pessimistic forecasts for Australian property prices – with prices tipped to fall everywhere except Perth in the worst- case scenario – but prices have been rising steadily in 2023. The senior economists at ANZ Bank, arguably the worst real estate forecasters in the nation, recently popped up with a report described a “triple whammy” of factors that will drag down property markets in 2024. Journalists and bank economists have a number of things in common – they’re pessimistic by nature, they’re not very good at their jobs, they’re slow learners and they’re not interested in helping people. They just want to generate headlines. So if you’re a property investor, and you have a plan, tune out all the media white noise and just get on with it.