Beware the doomsayers!
Terry Ryder, founder, hotspotting.com.au
The easiest, fastest and cheapest way to achieve widespread publicity in Australian is to predict that property markets will collapse. The bigger the predicted decline – 40%, 50%, 60% – the more mileage you can achieve.
You don’t need to be an authority on real estate or to have any credibility – just label yourself an expert or an economist and claim that you correctly predicted something in the past, and media will oblige.
Doomsday forecasts about our real estate markets are a dime a dozen. They have occurred regularly over the past 10 years. They all have one thing in common: they’ve all been spectacularly wrong.
One of the biggest sources are these Armageddon scenarios are American spruikers visiting Australia for a seminar tour, a book launch or a new business venture. They know they can always drum up some publicity for their event by making a sensational forecast of markets collapsing, bubbles bursting and prices disintegrating.
The latest example was the 60 Minutes segment featuring an obscure US “expert” named Jonathan Tepper. His claims will be consigned to the same scrapheap as all those that came before him.
One of the worst examples was US doomsday specialist Harry S Dent who came to Australian in 2011 for a seminar tour. He sought (and received) major publicity by predicting our home values would fall 40% in 2012. He advised Sydney owners to “sell their excess real estate”. Anyone who followed his advice would have missed out on value rises averaging 50% over the past three years.
But Dent was back in Australia two years later for another lucrative seminar tour and again went to the media for some free mileage. He said house prices would crash “some time in 2014”, with values falling at least 27% in Sydney and Melbourne. The market made a fool of him again.
Given the state of Australia media, I have no doubt that if Dent shows up again next year, he will make the same style of prediction and will be handed another round of massive national publicity.
Many others have come to our shores and used the Armageddon formula of generating publicity for their venture.
Little-known US spruiker Jordan Wirsz suddenly became well-known in 2012 by forecasting a “bloodbath” in Australian real estate, with home values tipped to fall 60% in 2013. He also said land values would drop 90%.
Think for a moment what that means: he was suggesting that residential land in Australia would be almost worthless.
Let’s be clear. Nothing remotely like has ever occurred in the history of the world, not even in the worst basket-case economy post-GFC. But Australian media chose to give these ridiculous claims credibility. And of course they were subsequently shown to be nonsense.
There have been many others, including another US spruiker called Jeremy Grantham who claimed in 2010 that the “Australian housing bubble” would burst that year.
They’ve all been wrong. And they’ve been wrong for clear reasons.
Australia is not in recession, it does not have high unemployment, we don’t have a vast oversupply of dwellings nationwide and our banks don’t lend recklessly.
We would need all of those circumstances to fall into alignment, as they did in the US around the time of the GFC, before our property markets would be in danger.