Welcome to the final month of 2020 (thank God I hear some/most of you say)!
Now that we have finished Movember, here’s a couple more relevant “Mo’s” for you.
FOMO = Fear Of Missing Out
JOMO = Joy Of Missing Out
Which camp will you be in if we fast forward a few months into 2021?
Let me elaborate.
Our major economists predicted a decline in house prices in FY21, which was subsequently re-hashed by our reporters as an imminent “housing market crash” and of course we then had a correction given the negative sentiment. Who could blame us, right?
However, the thing that protected us from severe falls was the fact that whilst demand came to a grinding halt so too did supply. Everyone, including sellers and buyers alike, was on the sidelines waiting to see how it panned out.
Well, it’s looking like it panned out OK because now, only a few weeks later they have all done an about face and reporting growth expectations, with Westpac economist Bill Evans, as an example, forecasting a 15% house price growth (in 2022/23) and ANZ revising their 10% DECLINE to a 9% GROWTH next year!
These sorts of statements will no doubt get plenty of airtime and fuel consumer sentiment.
Thus, whilst no one has a crystal ball, you don’t really need one because if everyone believes house prices are going to rise then they inevitably will. This is what is referred to as a “self-fulfilling prophecy”.
More people are out looking for property. FOMO is alive and real and it’s only going to get worse.
- As above, many economists have now done an about face on their property price predictions for next year and beyond
- RBA have lowered interest rates (to a record low of 0.1%) and they are on record as saying that they expect them to remain low for at least the next 3 years.
- Lenders have responded by cutting fixed interest rates to below 2%!
- It’s easier to access equity in your home now (for a deposit on a purchase) and there’s even lenders giving you $4000 cashback to move to them
- Auction clearance rates are well up
- Consumer sentiment is at it’s highest levels since 2013
- Government grants have never been higher
- Listings are tightening
- Borrowing is about to get a whole lot easier
- Stamp duty has just been cut in Victoria
- Homebuilder Grant has been extended
- Building approvals at record high (levels not seen since Feb 2000)
So, if you have been thinking about buying a property but haven’t, now is the time to ask yourself “why not?”
I haven’t seen conditions this primed for growth since I started investing 15 years ago. I certainly haven’t seen the government throwing cash around like this before and I don’t expect them to again in my generation.
You and I don’t have to believe that house price growth is a good idea, or that it will even happen but I guess what I’m saying is when the papers start reporting on all of this and (usually conservative) economists are predicting strong house price growth then it’s only a matter of time before it becomes a reality.
Will the prophecy come true? Are we in for strong house price growth in the near future, or not? And once you have answered that, what should you be doing about it?
FOMO or JOMO?
Only you (and hindsight) can answer that one…