Nov 5, 2018
Is the media killing our property markets and the
Something is causing a crisis of
confidence -- and it’s not the economic
But homeowners and property
investors are scared.
They’re reading headlines
- Melbourne and Sydney house prices are falling
$1,000 a week.
Shorten government will decimate the property market because of its
proposed tax changes.
million investors will need to sell up their homes because their
loans will convert from interest only to principle and
No wonder they’re
But should they be? Are the
Today I’ll chat with Dr. Andrew
Wilson, Chief Economist of MyHousingMarket.com.au and we’ll tell
you what’s really going on.
Crisis of Confidence
The regularly reported ANZ-Roy
Morgan consumer confidence index is below the longer-term average
of 113 held since 1990
Investors are asking us at
Metropole if they should sell
So, what’s changed? What’s
Remember, different consumers
can be scared about different things but here are the factors that
could explain it:
never seen the media with as much negative press about house prices
heading south – not even during the global financial
- Headlines talk about rising interest
harder to get money from the banks due to the restrictions placed
by APRA and the Royal Commission has scared the banks,
Wentworth by-election result and the fact that we now have a
minority Government. This may mean we have another Federal
election, which might come sooner than the one expected in late
uncertainty of State elections in Victoria and NSW
stock market is pretty negative and crazy right now, with the
S&P/ASX 200 index down over 6% in October.
wages growth – increasing Petrol prices are now at the highest
level in a decade, which has to be scaring households on tight
Highlights of the Interview With Dr. Andrew
would have to go back to 2008 to see clearance rates consistently
below 50% at this time of the year, and that was at the time of the
global financial crisis.
- Currently, however, the drivers of the housing
market are on the opposite end of the scale. We have a strong
economy, unemployment numbers show that performance in the labor
market is best in six years. We’re creating jobs, we have strong
migration, there are booming first home buyer numbers, rents are
increasing, interest rates are low and not increasing. Yet the
market has lost its nerve.
have tightened their lending which means fewer buyers, which means
fewer sellers, and banks see the decline and tighten lending again.
It’s a self-perpetuating cycle.
consumer confidence is high, it can take a while to shift it back.
It’s even harder to shift low confidence to high
- Interest rates will probably go down before
they go up again.
have strong fundamentals for property. There’s no financial
Links and Resources:
Metropole Property Strategists
Rich Habits Poor
Dr. Andrew Wilson
Some of our favourite quotes from the
“Those who can see the big
picture opportunities and invest based on fundamentals, rather than
making investment decisions based on the media, are going to take
advantage of the opportunities the market offers them.”
“The best way to reflect on your
failures is to focus on the lessons that you’ve learned and the
person that you’ve become, rather than spending your time avoiding
failure.” –Michael Yardney
“It’s not the events that define
who you are. It’s how you choose to react to what’s happening to
you that defines who you are.” –Michael Yardney
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