I Can’t Believe The News Today

The Herald today reported that house prices are stabilising. So what does that mean for next year? Are we to interpret from this that we are finally past the bad news and now the only way is up? Or is the ‘double dip’ about to bite?

As someone pro property you might think I might trumpet this as a great signal we are on the verge of a great price surge and tell everyone to get in quick. Or maybe not.

Perhaps I would have thought this when I first started investing. But the longer I am involved in property the more I want to know about historical trends. I find monthly results interesting, but I find comparing trends of one property cycle (7 -10 years) to another more helpful. So that means looking over data as far back as it is available, in as many countries as possible.

When I do that I see that the trends of the last few years since the GFC are quite similar to those during the 90’s. So I can’t tell you what will happen next year, but I can tell you that we seem to be on a similar trend to the one that followed the 90’s boom. And on that basis I’m not sure that we are in for meteoric rise in prices next year, but we probably won’t see them fall much either.

So if we think prices are unlikely to fall much, and we know that prices might be flat next year, what do we do? Well it depends. It depends on your objectives and circumstances. But either way I wouldn’t panic buy thinking prices are about to surge.

Published on Wednesday, December 8th, 2010, under Directors Market Commentary

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