Let Research Shape Your Perception, Not the Media

Posted by Dominic Cavagnino

A story which was published on the 4th December 2018 by the Sydney Morning Herald, in relation to the state of our property market. This article will address the inaccuracies in that piece. It’s important to always cross check what you hear in the media with the research.

We develop our perceptions based on the information which is provided to us. It’s in our nature to trust the information we’re being provided. In today’s day and age whether we agree or not, the media play an influential role in shaping our perceptions. Their commentary is available on all aspects of life.

Often, you’ll find yourself adopting their ideologies for topics which they are no more knowledgeable than you are. Don’t forget, their job is to engage you and draw your attention to the stories they are telling. Considering the impact they can have on your decision making, it’s critical to take all information with a grain of salt.

You’re probably now wondering where I’m going with this, so I’ll break it down for you. Here’s a story which was published today on the 4^th December 2018 by the Sydney Morning Herald, in relation to the current state of our property market.

https://www.smh.com.au/business/banking-and-finance/property-market-falls-tipped-to-dwarf-90s-recession-20181203-p50jvi.html

One quote from this article which I’d like to put the spotlight on is this;

‘This brings cumulative losses since the peak of Sydney’s property boom in July last year to 9.5 per cent – within a whisker of the 9.6 percent drop in values between 1989 and 1991.’

There’s no doubt that Sydney’s property market is experiencing a correction. If you understand the cyclical nature of a property market, this shouldn’t surprise you. Sydney has come off a significant growth period, therefore a period of correction and stagnation is expected.

Our understanding of the cycle is what drove our decision to stop recommending the Sydney market back in 2013.

But just to provide an insight into the dramatized journalism which we are exposed to each day, here are the median house prices and growth rates for the years 1988 – 1991.

Year	Median House Price	Annual Growth Rate	Cumulative Growth Rate
1988	$141,000		29%
1989	$170,850	21%
1990	$194,000	14%
1991	$182,000	-6%

Source: Australian Bureau of Statistics (ABS) – 6416 Residential Property Price Indexes

The article today reported a cumulative loss of 9.6% over that 3-year period. According to ABS data, between the end of 1988 ($141,000) and the end of 1991 ($182,000) Sydney’s prices rose 29%.

The key message to take from this article is to take everything you read with a grain of salt. Understand the viewpoint of the author of an article and understand the real data before jumping to conclusions. Engage with a professional in order to receive objective guidance and information.

Posted by Dominic Cavagnino, on 4th Dec 2018