Episode 21: The Confusion Being Created by Media & Economists
Terry and I look back on the predictions made by a number of “so-called” Property Experts since the beginning of Pandemic.
We look at a survey in April 2020 that found that most Australians believed property prices would fall 20% in the next six months.
Terry and I take an in depth look at these predictions from the “Experts” The Economists and see how accurate their predictions have proven to be…
We look at the phenomenon and obsession of Mainstream Media with highlighting with amazing regularity anything that is the wildest and most depressing of possible scenarios when it comes to the Australian Economy and possible recovery.
Terry shares the facts on what’s really go on with Sydney and Melbourne when compared to the rest of the nation in that most locations across Australia have rising prices and six of the eight capital cities have house prices higher than at the start of 2020.
It’s the usual suspects such as the Commonwealth Bank with its predictions for Australian house prices in April, with a range of scenarios including a decline of over 30% this year. It said at least 10% in the next 6 months and 20% on an annualised basis, with a worst case scenario of more than 30%.
CBA’s new forecasts in September this year – admitting the market had held up better than expected and would rebound strongly.
Westpac fared no better with dire predictions at the start of the pandemic only to review their forecasts from six months to now suggesting a property boom in the near future…
Terry and I take a wack at their flimsy reasoning being record low interest rates and freely available credit. We note that this low interest rate environment is not a new phenomenon.
In April NAB suggested prices might fall as much as 30%. -The bank presented a “base case”, or V-shaped scenario, assuming house prices would fall 10 per cent this year along with a sharp increase in unemployment, before property prices recovered slightly with a 2.6 per cent increase in 2021.
Under a “severe downturn” scenario, the bank assumed house prices would plunge 20.9 per cent this year and a further 11.8 per cent in 2021, before a 2.5 per cent increase in 2022.
In April Louis Christopher Managing Director of SQM Research said he couldn’t rule out a 30% fall in property prices particularly if we have a second wave of the virus attacking this would be a very bleak scenario for the Housing Market – You couldn’t rule out a 30 per cent decline in property prices if restrictions were extended for six months.
Terry puts the spotlight on a another Economist who continually gets it wrong but alarmingly the media have an obsession with the much-quoted Shane Oliver, Chief Economist of AMP Capital, who predicted a 20% decline in property prices. More recently he has admitted that he was wrong and has released a more moderate forecast.
We look at a possible Utopia and pretend what it could be like if the Mainstream Media promoted and focused on the many positive stories coming out of in particular Regional Australia and other Capital Cities other than Sydney and Melbourne.
Terry and I discuss the impact of this type of Negative Clickbait Journalism on the mental health of our community particularly those in Melbourne right now who are enduring a prolonged and unnecessary extended lockdown.
Terry looks at the “Perfect Storm” that is presenting itself to Australia’s First Home Buyers with record Federal and State Government Grants and the Federal Government’s Guarantee that is helping these first time home owners avoid the cost of Lender’s Mortgage Insurance.
Terry and I dream of a possible Utopia and pretend what it could be like if the Mainstream Media promoted and focused on the many positive stories coming out of in particular Regional Australia and other Capital Cities other than Sydney and Melbourne.