Seek clarity in the current echo chamber

Seek clarity in the current echo chamber

posted in: Real estate stories | 0

 

It’s a fairly exciting time in property. After years of inactivity, many markets are beginning to roar back to life. Developers are busy again, investors have come out of hiding and there’s an air of optimism. And nearly everyone has something to say about it.

 

BY SHANNON MOLLOY

Depending on who you listen to, Australian property is either extremely overvalued or just about right. Current price growth momentum in Sydney and Melbourne could be either unsustainable or simply making up for lost ground.

The economy is strong. Or weak. Or not doing a whole lot of anything. The mining boom is dead, it’s fine or it’s not doing a whole lot of anything. Unemployment is tipped to rise, fall or not do a whole lot of… you get the picture.

As a result, the medium to long-term outlook for property investors is rosy, uncertain or comparable to the horrors witnessed at a booze-fueled teenage house party hosted by Miley Cyrus.

In short, commentary about housing and property investment has a tendency in to be about as clear as mud. Who do you believe?

The irony is, when things are pretty grim everyone tends to agree that they’re grim. When they’re looking good, there’s no consensus whatsoever.

Regardless of whether you’re an investment newbie or a seasoned property mogul with an expansive portfolio, the echo chamber of property commentary can be confusing and overwhelming.

Some of them are good, a few are very good, but many are just loud.

They talk the economy, housing broadly and intricately, trends and data, industry happenings and what’s on the cards for the short to medium-term. Some are bullish, some are bearish, all of them are influential in their ability to either embolden or frighten their audience.

One may scream loudly about how hotspots are crap while another will just attack other property commentators. Another may champion a view that prices can only go up, while a second passionately argues the exact opposite and a third presents an argument that only seems to contradict itself.

Seeking clarity for yourself can be difficult. The key is to avoid being drowned out by the noise, find your quiet happy place and put things into perspective.

Rather than rely too strongly on the views of columnists, bloggers and the like, make a list of the following people:

  • A respected economist.
  • An independent property expert.
  • A well-versed demographer.
  • A statistician.

Those people and their views aren’t especially difficult to round up. Once you’ve found them, you’ll be able to answer some of the following questions:

  1. What is Australia’s economy likely to do in the next couple of years?
  2. What elements of economic performance impact housing and how are they looking?
  3. How’s the population in a region/city changing and what’s the outlook for it?
  4. Based on current supply trends and pipeline projects, is demand for housing likely to be met (both locally and on a larger scale)?
  5. How are demographics shifting? How is housing responding?
  6. What has the market done and what, based on basic supply and demand fundamentals, is it likely to do?
  7. How do current growth patterns compare to recent history? Where are they tracking in relation to previous peaks?

Then, just for fun, take a closer look at some of those commentators. Do a Google search and find out what they were saying five, six, seven or eight years ago. I can tell you that then, like now, they enjoyed seeing their names appear in news stories. Compare what they said then to what actually happened.

That might be all the perspective you need.

 

Shannon Molloy is the deputy editor of Australian Property Investor magazine, www.apimagazine.com.au