Knowing what the Market will do

It can really be so confusing trying to work out the state of the property market with so many conflicting reports and messages daily in the media. Predicting what the market will do is not easy.

Very few economists saw the GFC coming yet when it comes to property it seems that everyone has an opinion. The pessimists had us thinking that the property market was going to crash in 2011 and 2012. But it didn’t; instead the market slowed down for a couple of years, had a small correction and consolidated.

Knowing what the market will do can become a little easier if you are aware of the factors that drive and influence the property market.

The reason the property market did not crash in Australia in 2008 as it did in many countries is because the economic fundamentals that drive the Australian property market are strong. However,  short term the market is influenced and swayed by consumer confidence which is fuelled mainly by media reports; what we hear and read.

While consumer sentiment combined with doom and gloom reports cause many to adopt a wait and see approach, professional investors realise that a sluggish market (which is adversely affected by temporary short term low consumer confidence) can present good opportunity to buy for the long term. It is the long term factors that drive the investment decisions of professional investors. Negative market sentiment does not affect a fundamentally good investment; it simply provides an opportunity to buy it at a temporarily lower price.

According to the Reserve Bank Governor, Glen Stevens, the fundamentals for housing in Australia are solid. This is also the view of many leading and well respected economists and experts, such as  Paul Braddick, ANZ’s head of property research, Paul Bloxham, HSBC’s Chief Executive economist , Terry Ryder, renowned real estate researcher and founder of Hot spotting, as well as many others.

Knowing and understanding the factors that drive the market puts you in the driver’s seat and provides you with the knowledge and wisdom to make better investment decisions.

Uncategorized
Related Posts
Knowing what the Market will do