THE AMAZING EFFECT OF TODAY’S MEDIA

THE AMAZING EFFECT OF TODAY’S MEDIA

I have been selling real estate in the Rockingham District since 1984.

When I started a typical well presented home in the Rockingham Park home was selling for around $55,000.

My father, who was in real estate for 42 of his 50 working years told me he could have bought land in Applecross just after WW2 for 50 pounds ($100).

I have just read the latest presentation from the Perth Chamber of Commerce and Industry on the future for Western Australia showing economic growth in India of 37% since June 07 of 37%, China 31%, Western Australia 23%, Australia 11% as opposed to the USA with 1% and Japan with -5% and yet people are more fearful than at any time I can recall.

I believe the level of fear is mainly attributable to the incessantly negative forecasts in the media, principally from economists who have predicted 28 of the last 3 recessions. They are the modern equivalent of Chicken Licken, running around telling us the sky is falling. My beef with them is that there is no accountability when they are wrong.

Stand by for the shocking truth....No-one can predict the future (even with a degree in economics).

Perth’s most famous valuer predicted in 2004 that the market had peaked and advised against buying. In fact the market ran on for a further 2 years.

In London and New York prior to the turn of the 19^th century all the doomsayers were forecasting both cities would drown in a sea of horse manure. How could the forecasters be expected to foresee the internal combustion engine?

Warren Buffett is quoted as saying “When people are fearful be greedy” but buyers are still sitting on the fence, I presume thinking that they will buy when the media report the market has moved up. Do they fail to realise that sellers will see the same reports and therefore will be more confident of achieving a higher price?

In the very latest news from REIWA sales are up 25% from 4 weeks ago and 34% from one year past. First home buyer demand is up 10% and is higher than any time since March 2010.

Is this the beginning of a new trend?

I have no way of knowing, but certain facts hold true.

W.A continues to receive 1,000 people per week from interstate and overseas migration.

Home building has been subdued below normal for some years.

Our rental property vacancy factor continues to be extremely tight indicating continuing solid demand (people have to live somewhere), and rental returns on recently purchased properties are showing 5% gross return or above.

Humans still buy food, then clothing, then shelter in that order and for shelter they have only 2 options....buy or rent. Either way they must be housed and cannot delay the decision.

Real Estate continues to be much safer than shares. A company can go broke and the shares become valueless. That cannot happen with housing.

So, are you going to move like Warren Buffett or wait for the herd?

Ross Cutten

Director

Noble Real Estate