Another report that Aussie housing is risky. Probably a sign that prices are going to boom.
So, if you’ve been in the game as long as I have, you start to see things play out on a regular basis.
One of the things that seems to happen about every two or three years is that somebody or some organisation publishes a report saying that Aussie house prices are a bit bubbly.
Last week it was the IMF. The International Monetary Fund is a bit like the RBA, except rather than having a team of 100 economists looking at the Australian economy, they have like one or two.
And that one or two are also responsible for New Zealand and the Pacific Islands.
Anyway, what does the IMF reckon?
They reckon that Australia’s housing market is the second riskiest in the world, after Canada.
The IMF looked at 5 metrics and gave each of the 27 developed countries a score between 0 (least risky) and 4 (most risky). Here’s how Australia went:
Sure. So what then? Is the sky falling?
Time to sell Aussie property and buy… what? I dunno. Dogecoin?
No, if you listened to the IMF in the past – or to any of the Chicken littles in recent years – you would have lost money.
I can even give you a list:
(Signalling his decades-long commitment to being a broken clock.)
(Not near enough, apparently.)
(He even sold his house! In 2011!)
(They pretended to be a gay couple to see how easy it was to get finance. They concluded it was far too easy. But still, nobody who bought in 2016 went bankrupt.
Joye wasn’t alone on this one. I think even I probably agreed with him at the time. But the Aussie property market never fails to surprise us.
The point is, looking at you IMF, you have to look at the property market fundamentals. You can’t just look at what’s happened in the past.
Just because we’ve had strong growth post-Covid, doesn’t necessarily mean we’re due for a correction.
Look at the balance of supply and demand. Look at the shortage of stock on the market. Look at the strong immigration inflow and growing population.
These are the things that are going to drive property prices going forward.
And when it comes to on-the-ground experts – from Corelogic to AMP to Westpac to whoever – nobody expects prices to fall anytime soon.
But that never sold a newspaper.