There is an insightful article in the May edition of The Monthly by Christine Kenneally (no, not the former Premier!) on media reporting of the property market. Kenneally highlights the fact that commentators portraying the market as "bullish" or in other words ripe for growth, often have a personal interest in providing that type of diagnosis. You can only expect agents to say that there has never been a better time to buy, when they are under pressure to meet sales targets and obtain hefty commissions. But is this actually what is happening in the market? When a premium property is lauded as being sold for a high price, is there information available as to what it sold for 2 years ago? The glow of a property that sells at auction for $2 million starts to fade when it is discovered that it was purchased 18 months earlier at $3.5 million.
Professionals in the property industry often gain directly or at least indirectly from commentary that supports a buoyant market. This doesn't mean that you should ignore what is said by real estate agents or other property professionals in the papers or other media. What it does mean is that you should carefully and critically evaluate what is said about the state of the property market. When you read, hear or watch a piece on the real estate market, consider the following:
- Who is the author/presenter? Who do they work for? How might their interests be affected by the article?
- Consider the nature of their source. Is it a primary source (such as government statistics etc) or is it a secondary source (i.e. just parroting what another agent said)?
- Evaluate any research/statistics used. Is it based on surveys, academic research or property industry bodies?
Jonathan Marquet
Emil Ford & Co.
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