Some economists have been predicting a property market collapse in Australia for over 30 years, yet the economists that have tried have never accurately predict a true property market collapse.
According to data from the Australian Bureau of Statistics (ABS), the median Australian house price has increased by over 50% in the past decade.
In the 2012 June quarter, the Australian weighted average median house price was $519,768 according to a report published by the Real Estate Institute of Australia (REIA).
The 2022 June quarter showed the Australian median house price was $1,065,186 according to domain.com.au.
If an investor were to listen to the advice of those predicting a collapse and wait for the property market to collapse before they bought, they would have been stripped of over a half a million dollars worth of gains, if they were to buy just one “average Aussie house” and hold it for the same 10 year period.
Despite numerous incorrect predictions of a market crash over the decades, we continue to see headlines in the media using wording like
“ Property Market Bloodbath ”
or
“ Disaster Collapse in the Property Market ”
The fact of the matter is the property market combined capital city prices are up 2.3% year on year (YOY) September 2021 to September 2022.
This isn’t to deny the fact that some markets across Australia have certainly felt large price falls of over 10% and 20% but these are not the norm that some media outlets would have you believe.
So why do the some economists seem to continually get it wrong? One reason may be the complex and ever-changing nature of the property market. Economic factors such as employment rates, interest rates, and population growth can all impact the demand for housing and ultimately drive prices up or down.
Because these economic factors are so far from the control of anyone, they may often lead to some concluding to err on the side of caution and stay out of the property market. Not all experts agree with this, with some that take the approach of looking at the glass half full instead.
“There’s always a reason not to buy” says buyers agent Kev Tran from Investor Kit.
“It’s natural to wonder if it is a good time to buy or not, but we have the benefit of hindsight, and a good reference point to look back on would be 2008 to now”
Mr Tran went on to describe the following events and how all of them could have had a “strong case” made around them as to why it was a bad idea to buy real estate.
2008 GFC
2010 End of the Australian mining boom
2015 to 2017 APRA restricted lending to investors
2020 Global pandemic Covid 19
“ If you think about it there’s always something happening, either world wide events, government initiatives or lending changes, that’s going to make you go it’s probably not the best time to buy”.
However Mr Tran went on to point out that in the 14 year time period outlined above the Australian median house price increased by 94%.
Mr Tran added “ that’s 8.6% per annum increase ”.
Despite the lack of accuracy in the predictions some economists are making, many people have chosen to follow the advice and have avoided investing in property.
The fact is there’s always going to be risk when buying a property, your job as the investor is to make your investment decision using the right facts from trusted professionals, not media headlines.
Listen to the full episode with Kev tran discuss the topic of buying now or waiting ( Pizza and Property podcast – Buy Now or Wait? )