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Don’t Necessarily Believe Media Headlines When It Comes to Australia’s Property Market

Don’t Necessarily Believe Media Headlines When It Comes to Australia’s Property Market

Here are two media headlines referring to Australia’s house prices in May.

First headline: House Prices Fell in May. (This information was based on CoreLogic data declaring a drop in house prices of 0.4%)

Second headline: House Prices Rose in May. (This information was based on SQM research declaring a rise in house prices of 1.1%)

So which is correct?

Factually, they’re both correct because each has their own parameters and methodologies for determining their figures. And, of course, each may well have their own agenda.

We’ll see the same scenario of mismatching figures very soon when the ABS and Domain release their latest figures. They’ll release different numbers because they base their figures on thousands of sales over a certain period of time. But the question is: what is a sale? Is it an offer, a signed contract, an unconditional contract, or a settlement?

Realistically, there’s not a huge difference between either of them and they both agree that the property market is facing major negative forces, and therefore remains unusually stubborn.

There has always been, and will always continue to be, two camps when it comes to house prices. First we have the doomsday forecasters, typically economists, who hold on to their often-flawed theories on how they believe property prices should perform. Then we have the opportunists, who never miss an opportunity to garner free publicity.

How Did the Share-Market Meltdown in February Affect Property Prices?

The share-market had a meltdown on 20 February, resulting in an ominous prediction for property prices. The meltdown was big news and resulted in grabbing headlines across the country.

  • The Australian: AMP Capital - House Prices to Fall by 20%
  • Financial Review: UBS - House Prices Could Fall by up to 20%
  • The Age: House Prices to Plunge 30% As Clearance Rates Fall off a Cliff
  • Financial Review: UBS - House Prices Will Collapse
  • Financial Review: SQM - Can’t Rule out 30% Fall in House Prices
  • The Age: House Prices Could Plunge 30%

The culprit with all these headlines is COVID-19 and the devastating impact the virus has had on the Australian economy. However, we’re already on the other side of serious health impacts and tough restrictions, and Australia is emerging quite rapidly from lockdown. The country as a whole is anxious to return to what was ‘normal’ just a few short months ago.

Mainstream Media’s Negative Reporting on the Australian Property Market

Mainstream media was quite negative when the price data showing minor growth for March was released, stating that the true impact was yet to be seen. However, when April figures were released, again showing minor growth, the media forecast that prices in May would nosedive.

In May, CoreLogic data revealed that, out of 15 market jurisdictions, there was either growth or no change in house prices. This included eight capital cities and seven state regional markets. The overall result was -0.4%. SQM data revealed a capital city rise of 0.5%, with house prices increasing in Melbourne, Sydney, Adelaide, Perth, and Canberra. The national rise, as reported by SQM, was 1.1%.

So what are the media forecasters saying now? Well, in order to justify their negative attitude regarding the Australian property market, they’re predicting that, while house prices are currently stable, when the stimulus runs out in September everything will come crashing down.

We know that negative headlines make great news. Unfortunately, mainstream media in Australia are still forecasting no changes over the next 3 to 4 months, and that when September arrives and there’s no more stimulus package, lenders and governments will recklessly turn off the tap without considering the consequences.

Our Property Market Is Still Relatively Strong

The media appears to be placing too much emphasis on mortgage holidays and JobKeeper and is overlooking the importance of other key factors, like the $25,000 grant to renovators and home-builders, grants and loans to businesses, infrastructure spending, support measures for renters, and other government stimulus packages.

The truth is that the property market is still strong, even though we’re four months into the COVID-19 pandemic. At this point, there’s simply no economic reason why this situation should change. Australia has remained strong during this crisis, and while we agree that it will take some time for the overall economy to recover, it appears that the property market has not been as negatively affected as first predicted.

So let’s seize the day and create an air of positivity about Australia’s property market. There’s a great future out there for those who know how to spot property investment opportunities. Investors who take negative media reporting with a grain of salt have everything to gain.

Talk to you soon,

Jason

 

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Jason Dwyer

Jason is the Managing Director of Dwyer Property Investments and a trusted local expert. Together with build partner Dwyer Quality Homes, he’s been helping Queenslanders buy profitable, cash-positive, tax-effective investment property for 35 years. Visit dwyerpropertyinvestments.com.au.

FREE: Investor Starter Pack

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How we select high-yield/high-growth locations to maximise returns
3-step guide to becoming a successful property investor
Why property is one of the best investments
Must-know tips for investing in property (based on 35+ years’ experience)

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