As sure as winter turns to spring, gloom turns to boom in the media when it comes to the reporting of property prices.
Last spring, banking analysts were predicting property prices in Melbourne to fall by 10, 15, even 20 percent.
They cited rapidly increasing interest rates, the impending mortgage rate cliff, distressed selling and the associated surplus of supply and lack of demand to put strong downward pressure on property prices.
As usual, they were wrong.
The market had already been easing for about 10 months by then, well before interest rates starting going up.
Our market (houses in Stonnington) came off roughly 10 percent between October 2021 and December 2022.
Prices have been improving ever since.
What the pundits didn’t predict was that supply would remain so tight, and demand so resilient (helped by record immigration into Melbourne) that prices actually started to increase even as interest rates approached their peak.
This week, KPMG released a report predicting house prices to boom next year – around 15 percent in Melbourne by 2025 and 20-25 percent in some other capital cities.
KPMG cited a chronic undersupply of property, increased demand (fortified by record immigration), and interest rate cuts predicted in 2024 to put upward pressure on prices.
This report was of course picked up and blasted out by media outlets around the country, with the same zest and sensationalism as last year, the only difference being the verb at the end of the headline…
“Property prices set to crash / soar”
As always, we take this reporting with a grain of salt.
It’s a talking point, but should not form a meaningful part of your decision to buy or sell property.
When it comes to these property price predictions, it reminds me of that great line in Anchorman, “60 percent of the time [they get it wrong], every time…”
For those with our ears to the ground transacting property on a weekly basis, the market is proving very resilient and prices seem to be holding up or slightly improving month by month.
Whether this means that prices will remain relatively flat for the next 12 months, or the recovery will pick up steam, or we will see another (unexpected) correction, is anyone’s guess.
Real estate is a long game. Those who ignore the noise and make long term, pragmatic decisions tend to be rewarded.
Those who pay too much heed to the seasonal fluctuations, media reporting, or try to time the market perfectly tend to get left behind.
Feature Property: 1 Netherlee Street, Glen Iris
David Sciola 