Beware the “only I said so” property gurus

Posted by Luke Graham

Now that an exhausting 2020 is behind us, members of the global community are looking to 2021 and beyond in hope of a roaring 20’s version two. Economic data from the OECD indicates that many economies are progressively returning to their pre-pandemic outputs, and Australia has come out as one of the world’s best with respect to concurrently mitigating COVID-19 mortality and economic downturn.

Now that it feels like we are out of the woods, a number of our, ahem, competitors are hitting the social media circuit with claims that they were the only ones to predict stable residential property market performance during the pandemic and a strong 2021. Although it makes for a good headline, it simply isn’t the case. In essence, these claims serve the purpose of superficial marketing collateral more than they do anything else. The Blue Wealth Property research blog is one such source that can debunk these ‘black sheep’ and ‘lone wolf’ claims. Let’s recap some of our top picks of 2020:

10 March 2020

The day before WHO declared the COVID-19 pandemic, Australia was in the midst of toilet paper mania. On this day, we shared our first thoughts of the disease’s impact on the property market. The key message from this post was that residential property is considerably more stable than financial assets such as shares and that doomsayer anecdotes (such as the absence of bidders at auction) were not indicative of the broader market. We also said there would be short-term impacts on property, such as the rental market. This very much turned out to be the case in the following months, with rental vacancies skyrocketing in CBDs in particular.

24 March 2020

A couple of weeks after sharing our first thoughts on the relationship between the pandemic and residential property, we elaborated further on what happens to residential property during economic downturns. Key points here included:

Rate cuts improve mortgage affordability which place upward pressure on dwelling prices
About 70 percent of homes are owner-occupied, meaning owners can’t just dump their assets like they do with shares
COVID-19 could stall the supply of new housing

27 April 2020

After further detailed analysis from the research team of how residential property was being impacted by COVID-19, our CEO Tony weighed in with his perspectives. This became our most read article of 2020. Tony gestured to the government’s use of the phrase ‘hibernation’. This makes it highly unlikely a clump of supply would hit the market at once. In addition, Tony highlighted that residential property’s stable performance would likely attract investors seeking this in their portfolios. We are now seeing this take place at the institutional level, with global investment groups hedging their portfolios with billions of dollars in residential property. In addition, homebuyers are borrowing more now than they ever have ($24 billion in November 2020 alone).

2 June 2020

In this research blog, we shared with our readers that our forecast of a 2020 property market hibernation seemed to be manifesting. Data was being released on the mixed performance of different markets but as a general rule, Australians’ homes were worth more at that point than they were 12 months prior. With Australians adjusting to a new normal, we predicted the property market would begin returning to normalcy itself.

4 August 2020

In this blog article, we argued that pundits forecasting a crash were going to find it more and more difficult to justify their positions. Enough time had elapsed by this point for a crash to be showing up in the data, which just wasn’t happening. We also further elaborated on Australia’s adjustment to a new way of doing business, and that this would allow the property market to surge forward despite the pandemic continuing.

29 September 2020

In this blog article we started by saying that although COVID-19 delayed the upswing we initially predicted in our 2020 State of Play, it had also added more fuel to the fire in the form of rate cuts, government interventions and shrinking supply. In fact, market indicators were looking so good at this point we were cautioning our readers to beware of being swept up into the impending mania. The title of this article says it all: ‘How much could the pandemic turbocharge real estate prices?’

27 October 2020

Roy, our Head of Acquisitions, shared our thoughts on re-entering the Sydney market in this article. He highlights our expectations that Sydney prices will indeed increase, but that we see stronger long-term investment fundamentals in more affordable markets.

Posted by Luke Graham, on 19th Jan 2021