Real estate industry experts say the market is flat but want to get into it anyway

Recently, Larry Schlesinger provided commentary on the property market trending towards a “bottoming out” in 2012 and a “modest rise” in 2013 onwards, based on a 300 respondent-strong survey commissioned by the NAB Bank.

Following this, I conducted my own survey of market sentiment in regards to 2012 through to 2013. I was able to collect 50 responses, and the outcomes were quite revealing.

The respondents include a variety of industry experts (estate agents, mortgage brokers, advisors, professional investors), along with non-investors (those interested but yet to take the plunge, and those who may not be interested in property investment but are renters or landlords themselves). There were just seven questions asked, with multiple answer choices for selection, as well as the option to answer with their own comments.

1) How would you describe the outlook for the remainder of 2012?

- 50% felt the market was 'Trending badly, with 41% agreeing it was 'A bit wobbly, but will improve'

- Less than 5% felt it was 'Doom and gloom'. Others responded with their own comments, stating it was a 'buyers’ market' and that it was 'stagnant, but on the way towards upswing'.

2) And what about 2013?

- 67% agreed the market would 'improve a little bit', with 30% stating it would 'stay about the same as it is now'

3) Some believe the AU market is 'flat'. If so, are some types/sizes of cities more flat than others?

- 18% felt major metro cities were most flat (i.e., Sydney, Melbourne, Brisbane), with 32% feeling mid-size metro cities were most flat (i.e., Perth, Adelaide, Gold Coast)

- Only 9% felt that 50,000 to 500,000 size cities were most flat (i.e., Canberra, Darwin, Hobart), with 27% feeling regional towns of less than 50,000 were most flat (e.g., Tamworth, Dubbo, Kalgoorlie).

- 22% believed that all markets, regardless how big or how small, were completely flat.

I then asked the audience how they came to these opinions – so, what kind of media or information had they consumed to draw these conclusions? The results were quite interesting and really supported the notion that mass media, trusted colleagues, and specific due diligence were better regarded than specialist media!

1) What outside influences helped to inform your opinion?

-A whopping 54% said mainstream media (generic news/current affairs, radio, metro newspapers like SMH/Age/West Australian, etc) influenced their opinions about the state of the property market, a frighteningly high statistic!

-29% preferred specialist media sources specific to property investment (specific radio/TV programs to this, specialist magazines and books, specialist published websites)

- A massive 54% relied on the trusted word of informed acquaintances (family members with experience, mortgage brokers/accountants/advisers, academics)

- Just 8% trusted blog-based commentary, and 4% listened to 'untrusted' associates (any comments heard in passing, from any source/stranger)

2) If any of these information sources mentioned the market was 'picking up again' or 'showing signs of improvement', which would you trust most?

- The response to this was very even; with the biggest group (33%) mentioning news feeds on sites like RealEstate.com.au and Domain.com.au as the most trusted, followed by trusted informed acquaintances (29%), specialist media outlets (29%), and mainstream media outlets (29%)

- 13% also trusted macroeconomic reports in mainstream media (so, the 'economy' improving and positive talk about our 'currency getting stronger'). This is interesting because in my view, the property market runs independently to variables such as these.

- Interestingly, many comments were also added, mentioning wage growth rates, interest rate changes and other economic factors as being the biggest indicators of the real estate market changing.

Lastly I asked some questions regarding the community's interest in purchasing either an investment property or a home to live in, either this year or 2013. Here are the responses to both:

Whether or not you currently own property of any kind; would you consider buying an investment property or a home to live in, this year or next?

- 'Yes, certainly' - 25% (investment property), 42% (home)

- 'Most likely' - 21% (investment property), 13% (home)

- 'Maybe, maybe not' - 29% (investment property), 13% (home)

- 'Probably not' - 8% (investment property), 25% (home)

- 'Certainly not' - 17% (investment property), 8% (home)

So, what does the community make of all this sentiment?

If I could add my two bits' worth; I'd suggest the market feels that despite flat growth and some areas trending badly, there is still a strong desire to enter the property market, not only as a home owner but also keenly as an investor, this year and moving into 2013. From a media perspective, I'm also concerned at the high volume of respondents placing their reliance in mainstream/generic media sources and not specialist media and the blog community around them.

I'd be keen to hear the thoughts of others regarding these subjects.

Lastly, I was recently a participant in a Swinburne University study recently on "renter investors". If you would be interested in participating in a 30-minute interview, please email Ailsa McPherson.

Cameron McEvoy is a property investor and maintains a blog, Property Spectator.