April 12, 2021 by Dymphna

My housing predictions 1 year ago: How did I do?

If you listened to me, you’re sitting pretty.

Way back in late April last year I made the following prediction about how the Covid crash was going to play out and what I thought would happen to house prices.

First up, I noted that there was a phenomenal amount of fear in the market. That’s normally when opportunities are thickest on the ground, but it’s very hard to buy against the advice of your Uber driver:

Fear is easy and fear is seductive, and if you’re not clued into that fact, then you can miss massive opportunities.

Australia looks set for a recession… at least!

The global economy is definitely set for a recession, and it’s very conceivable that we’ll find ourselves in a global depression before too long.

At its worst, it’s probably going to feel like the end of capitalism, if not civilisation itself.

..Investing in anything will seem like it makes no sense. That’s what the papers will say. That’s what everyone will tell you. That’s the advice you’ll get from your Uber driver.

“Don’t buy now. Are you crazy?!?”

And, like always, that will be the perfect time to buy.

I’m making it sound easy, but buying against the herd is incredibly hard.

You need to build confidence in your education, confidence in your strategies and confidence in your ability to read the market.

I also laid out my case for the coming boom – why I thought house prices would inevitably launch on super-cheap money and massive money printing:

So I think what will happen is that all this money printing will backstop the economy and prevent it from a total wipeout. There will still be a ‘grind’ but we’ll avoid complete catastrophe.

However, like always, government money is slow to come off. The recovery will be patchy and many sectors will want stimulus to remain. If the government tries, the markets will “tantrum” like they did through the post-GFC “taper tantrums.”

And so the stimulus will remain long after the economy has found its feet again.

At that point, all this money goes from being a back stop to a stimulant, and will drive asset prices higher. And since we’re on such an extreme dose, the effect will be huge.

And so what have we got, almost a year on?

House prices grew a ka-wumping 2.6% in the month of March alone – the biggest monthly increase in 33 years.

You’ve got to go all the way back to 1988 to get a monthly increase of that kind of magnitude.

Even I wasn’t in the market back then!

So, what do you reckon? How do you rate my predictions.

I’m calling that one a hit.

Many of my students listened. Many of my students are now sitting pretty.

But, you’ll also know that I’ve been saying that we’re not done yet. Not by a long way.

Watch this space. Some of the stuff I’m going to show you will blow your mind.

DB.