It’s impossible to miss the complete garbage that real estate agents are quoted saying in the newspapers each and every day. If I could get a dollar for every time I heard someone quoted as saying that prices are about to soar I would be retired in the south of France. Brian White of Ray White Real Estate even went further to say that rising interest rates in Australia would not adversely impact the housing recovery.
When I read these types of things I can’t help but ask myself “Will readers actually believe this type of baseless hype?” I certainly hope not but why is it that real estate agents find it almost impossible to say that prices are going backwards, are flat or that activity may be adversely impacted? Do they think that the public are stupid and can’t see through the fact that they are talking the housing market up?
So what are the current facts? The Global recovery is very much in its infancy and Australia cannot escape the fact that we are part of the global economy. Australian Treasury Secretary Dr Ken Henry said yesterday that Australia’s growth would remain below its trend level for at least the next year. He went further to say that “evidence of a self sustaining recovery in private activity remains tentative at this time”.
So with only “tentative” evidence of a self sustaining recovery (in other words one where the Government can withdraw its stimulus measures) how could someone draw the conclusion that housing prices are on the rise? Let’s not forget that the First Home Owner’s Grant is now being wound back and will be gone by the end of the year. There is already evidence emerging that the purchase of existing dwellings may be slowing as a result of the Grant wind back.
To add salt to the wounds rising interest rates will impact on business bottom lines. In short the higher interest rates mean an increase in the cost of doing business, the higher the prices for consumers, the more cautious consumers will be and the more pressure that will be exerted on job numbers.
None of this is conducive to increased sales activity and it doesn’t take a Rhodes Scholar to work out that anything that places pressure on job numbers is of concern to the greater housing market.
Before you believe the next real estate agent you hear or read telling you to buy before prices soar, it might be worth having a think. What is the motive of the agent? Is the information that he or she is giving making sense with what our Treasury Secretary, the Reserve Bank or Economists are saying? If it doesn’t make sense then you are hearing more real estate lies.