Issue 21 | September 27th, 2018 | 60 Minutes Got It Wrong!
I have been in the real estate industry for well over 40 years and through 6 real estate cycles. Whilst every cycle is different, they are all so much the same. One of the features of a real estate cycle is the opportunistic sensationalization of certain parts of the cycle by some media outlets. Usually, in a rising market, it is the fear of people missing out as prices rise, and in the correction phase of a market, it is the fear that they will lose money as prices readjust.
Whilst in the correction phase through my career I have seen 4 previous poorly researched and over sensationalised stories, 60 Minutes went to a whole new level last Sunday week. A number of previously unheard of so-called ‘real estate experts’ went to a new level of fear mongering where they suggested that the real estate market as we know it was facing Armageddon and the property market would never be the same again. The same old story that I have heard 4 times but of course never came to fruition because they keep forgetting one fundamental of real estate. You and I, and everyone else, need a place to live. We either buy our own home or someone has to buy one to rent it out to us, and so there is a constant demand for our ever-growing population. Sure prices go through cycles based on a couple of key factors such as the strength of our economy, interest rates, population growth, unemployment, housing affordability, and one key mix which is the ever-changing balance of supply and demand.
In almost all of the above indexes, we have a very strong green light. Housing affordability is the main amber light at present with the current slowdown in the market, and some readjusting in Sydney and Melbourne which are completely different markets to the rest of Australia.
Responsible journalism would have seen a balanced story presented; views from those who have concerns about the real estate market and views from experts, and there are many of them, who are very confident about our real estate market at present. But no, 60 Minutes wanted to sensationalise the story and searched around for 3 or 4 people who could all share in their negativity. It has been wonderful to see over the last 10 days or so that some of the most renowned Australian economists, and some of the most accurate research houses, have all been highly critical of the 60 Minutes story.
In fact, one of the people quoted in the story, Louis Christopher, was so alarmed with how the story was presented, and the fact that they only aired part of his views on the market, that he ended up getting some airtime last Thursday to be very clear he sees no downward trend in the real estate market and, at worse, a flat line with perhaps a modest upswing.
The big message that was lost was that they were predominately talking about Sydney and Melbourne. We have just seen a report out this week which shows that the Brisbane market has been rising. The fact is…markets all around the country are different and are driven by different local factors, and so again this story just failed the test of authenticity or balance.*
*I am sure, like the four or so almost similar reports over the last 40 years, the 60 Minutes story will just drift into irrelevance land. They probably got the ratings they were looking for, but the real estate market will continue to be driven by its fundamentals and not a news program. In fact, this last week has been one of the strongest weeks of 2018 for our office. There has been a lot of very substantial sales, and with a particular surge in sales activity in the $2m + bracket. It is also the week where we saw the Minutes of the last Reserve Bank meeting released, and in that it revealed that the central bank of Australia is broadly optimistic about the outlook for Australia.
What was quite amazing was that the last two weeks have in fact been the strongest activity we have experienced in the real estate market for the entire 2018 year. The first half was very disrupted by the Commonwealth Games, but we have seen renewed strong activity in the higher priced brackets with lots and lots of sales between $2 million and $5.5 million, and many of those coming from our auction properties where there were 4 or 5 bidders on the properties, or indeed sales happening prior to auction because of outstanding offers. I think 60 Minutes credibility has been in question for quite some years now with some highly irresponsible journalism.
On a separate note. We had an amazing night last Saturday night where we saw a record full-house capacity attendance at our Ray White Surfers Paradise Muscular Dystrophy Ball. It was a spectacular evening of enormous community goodwill by Gold Coasters, resulting in $150,000+ raised to fight the dreaded Muscular Dystrophy disease that is affecting so many of our youth. This adds to just over $3.2 million we have already raised to date and we remain committed not only to supporting our local Southeast Queenslanders with Muscular Dystrophy, but also contributing to the research in finding a cure for this disease. A big thank you to all the amazing contributors.
I trust you are enjoying our beautiful spring. Until I see you in a fortnight’s time, stay safe.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group