Take property market doomsday predictions with a grain of salt, do your own research

GUEST OBSERVATION

These days everyone has an opinion on the state of the Australian property market – and the louder and more panic-inducing, the more attention their comments are likely to receive.

In early 2012, those already invested in the Australian property market may have been made to feel slightly uneasy by commentary predicting prices would fall by up to 60% in 2013. Individuals focusing on other investment markets may have breathed a sigh of relief, happy to now wait until the decline had passed before entering the market at a better time.

As we now know, 2013 actually saw a strong recovery in the Australian property market, with values finishing the calendar year 9.8% higher and property values in Australia currently sitting 16.1% higher than the start of the current growth cycle which started in June 2012.

The important thing to remember is that if you predict a market collapse every single year, one year you are bound to be right. This can encourage people to continually try to predict movements in markets they may not have relevant insight into; to one day be able to say ‘I told you so’.

Another thing to consider is the context and timing of when data appears and to remember that data is often historical and doesn’t necessarily represent a picture of where the market will go.

This is not at all to say that informative websites such as the Australian Bureau of Statistics or RP Data are providing incorrect statistics. These sites are hugely useful and credible resources for looking at pricing information and property trends, which might then be used in guiding more informed purchasing and selling decisions.

Another limitation of the data is that it is affected by a range of operational factors in addition to the movement of the market. For example, Christmas is a period of downtime for many Australian businesses – and the analytics industry is not immune to this. This is why traditionally the January/February periods often records low levels of activity, while March can appear to experience a slight uptick. Such fluctuations are not necessarily caused by what’s happening in the market but are rather impacted by the low levels of data provided during quieter periods.

Instead of paying too close attention to these often conflicting opinions and data points, it’s best to focus on doing your own research, talking to agents and listening to reliable commentators and forming your own thoughts about events in the property market.

Charles Tarbey is chairman and owner of Century 21 Australasia.