When talking about the property market and predicting future trends, what we pride ourselves on at Direct Collective is our ability to look deeper into things. We have a well-developed and robust way of grading sources and information before it enters our modelling when we make our predictions. In developing our models we look for…
When talking about the property market and predicting future trends, what we pride ourselves on at Direct Collective is our ability to look deeper into things. We have a well-developed and robust way of grading sources and information before it enters our modelling when we make our predictions.
In developing our models we look for patterns and indicators across a range of industries and intel sources and dig deep into history. We check, we cross check, we ask (soooo) many questions. We compare, we assess and we review in light of two, very critical rules before we make our calls. What are those rules?
Rule 1: Don’t fool yourself
Rule 2: You’re the easiest person to fool
What we don’t do is look at past trends and determine solely from that.
This week COO Mal Cayley featured in an article on Australian Property Investor with the following headline:
Three decades of property trends dispel myths, offer hints of the future
What can the previous 30 years of real estate market performance in Australia tell us about the future?
Here is what it was about:
“A CoreLogic study of 30 years of housing values offers some solace to those whose property prices have been retreating, finding that the past 30 years of peaks and troughs indicate the market will bounce back, albeit eventually.”
CoreLogic executive research director Asia-Pacific Tim Lawless said “While housing values move through cycles of growth as well as declines, the long-term trend is undeniably upwards,” and “Changes in housing values over decades are a clear reminder that time in the market is more important than timing in the market,”.
This is why looking at past trends can be misleading. Mal was quoted in the same article with the following response:
“It’s actually redundant for us to have a discussion around property at a macro point of view and talk about how it’s going to perform over 30 years, because the next 30 years is going to be very different from a global and a geopolitical environment to the last 30; very, very different.
“From a property investor point of view it always comes down to what is happening in a specific market around the three drivers; economy, demand and supply, and then being able to understand and look forward – not backwards – to what are the factors that will create change in those three areas over the short, medium and long term, because that’s how you make sound investment decisions.”
It continued on..
“The very premise that the last 30 years in anything that we’re looking at can indicate the next 30 years, it’s fundamentally flawed because the world as we know it is now more reflective of the pre-1990s, in particular of the 1940s and ‘50s, than the last 30 years,” Mr Cayley said.
Scarily, people make property decisions based on one article or opinion. This is why we are so passionate about educating and working with investors to ensure they fully understand the market and the opportunities available to them.
Money can be made in any market if you have the right team behind you and a solid plan in place. Contact us today to discuss current and upcoming opportunities.