Why You Should Never Trust Property Forecasts (Banks Get It Wrong)

In This Week’s How’s The Market | Edition 154

• Media Headlines Create Confusion

• Bank Forecasts Are Often Wrong

• Timing The Market Rarely Works

The property market is full of uncertainty right now.

 We’ve got inflation rising. Interest rates going up. Fuel costs are skyrocketing.

 And the media is full of conflicting headlines.

 Amid all this, banks release forecasts.

 They change dramatically from week to week.

We are actively seeing this scare buyers and vendors and push them into wrong decisions, or more frequently… indecision.

A Quick Look at the Market

For the week ending 22nd March in Melbourne, there were 1,584 auctions.

The clearance rate dropped to 46.84% according to SQM.

That’s below last week’s 48.11% and one of the lowest rates over recent years.

Looking at the top end of the market, properties above $1.5 million across Stonnington, Port Phillip, and Yarra had a clearance rate of 56%.

Interestingly, Port Phillip and Yarra performed the strongest, followed by Boroondara and Stonnington.

The Data

Over the last 15 years, bank forecasts have been correct within 2%, twice.

6 of the 15 forecasts have been very incorrect.

7 of the 15 forecasts have been heavily underestimated.

For example, in 2013, banks forecast 3–5% growth nationally. Actual growth was over 10%.

In 2015, a 0–5% prediction was far off from an 8–9% result.

Even “worst-case” pandemic predictions were way off. SQM predicted -20 to -30% during COVID.

Instead, the market rose 10–15% in 2020 and 20% in 2021.

These forecasts cannot account for wars, pandemics, natural disasters, or sudden economic changes.

Relying on them for decisions is risky.

The Media Doesn’t Help

Why is this so important?

Because the bank headlines scare so many people from taking action or encourage people to jump into the wrong locations at the wrong times for the wrong reason.

Here are some of the headlines that are out there right now:

1. Experts warn property slowdown is already underway on back of latest rate hikes – REA
2. Australian house prices to defy crash fears experts warn – Also REA
3. House prices to rise 7.7% in 2026 despite interest rate uncertainty – KPMG
4. Booming cities face slowdown as housing market passes $12 trillion milestone – REA
5. ‘Tough pill to swallow’: Expert reveals unwelcome solution to Australia’s skyrocketing house prices – Channel 9

What The Agents Are Saying

So many agents are quickly being forced to change campaign strategies right now.

With such a rubbish clearance rate, many agents are opting to move auctions out or convert campaigns into private sales or EOIs mid campaign.

I’ve also seen some huge price drops recently. Multiple agents last week I was speaking with have told me they dropped prices by $200k+ on some of their properties as they had vendors who had already bought and no interested buyers mid way through their campaigns.

Turbulent markets can call for aggressive campaigns.

The Wow Factor!

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Albert Park Landmark Victorian Residence

Why it WOWs:

• Iconic freestanding Victorian reimagined with cutting-edge luxury
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• Rooftop turret with breathtaking 360° city-to-bay views
• Basement gym, wine cellar & full smart home automation

Price guide :$9,000,000 – $9,900,000