The Australian property market has been consistently disrupted by false and misleading predictions which coupled with a widespread tightening of credit policy has created the real issue impacting our industry.
A fallout from the Banking Royal Commission saw banks apply stricter lending requirements that made it difficult for consumers to obtain finance, particularly for investors.
Whilst I have the greatest of respect for our banks, their actions mean that equity is no longer king.
The criteria for consumers to obtain approval for a loan has become very stringent in the current environment.
This is causing most of today’s problems and is disrupting our industry far more than the upcoming federal election.
Until we see some flexibility return to the banks’ lending criteria, the housing market will continue to remain flat, regardless of the outcome in the upcoming election.
Understanding and awareness of this issue must be given more prominence within the industry.
The so called ‘property experts’ have not helped our industry over the last 12 months with numerous and widely publicised predictions of an impending market crash in the vicinity of 30 per cent to 50 per cent.
Whilst such headlines may have brought some buyers into the market (first home buyers in particular), the reality is that these enormous drops simply didn’t eventuate.
The recent CoreLogic-Moody’s Analytics Australia Home Value Index Forecast sees house prices falling in Sydney and Melbourne by 9.3 per cent and 11.4 per cent respectively during 2019.
These figures reflect the most accurate representation of the current market and are in striking contrast to those thrown around by property pundits who do little but disrupt consumer knowledge and confidence.
House prices escalated well beyond where they should have in the last growth phase due to the prolonged low interest rate environment and availability of credit which spurred on the market.
I have always held the view that prices will fall and then stabilise at a similar level to where they were about 2 years ago.
Expert predictions fail to mention that despite property prices falling over the last 12 months (and are forecast to do so again in 2019 across most states), the decline in value is nowhere near the gains achieved over the preceding five years.
This should be a fact that should be publicised rather than focusing on the inaccurate property price predictions that are driving negative sentiment.