Chris Zappone, a prominent reporter who contributes to the Sydney Morning Herald, Fairfax Business Day and the Brisbane Times is fond of expounding on the information from Steve Keen’s “Debtwatch” when he writes about the state of the Australian Housing Market. However is this information about the state of the housing market in Australia accurate?
There are several predictions made by Keen that Zappone seems to have followed blindly and then written about have not turned out to be correct in the end. For instance, in 2006 he claimed that the Gold Coast was already in a recession and that the Australian Debt/GDP ratio would exceed 160% by the end of the year. This just did not happen.
Several predictions gleaned from Keen and reprinted as gospel by Zappone also did not come true in 2008
- Keen predicted unemployment rates would rise to a double digit and today the rate is only 5.3%
- Keen predicted interest rates would be at 2% by 2009, and 0 by 2010 and today the rates are 4.24%.
- Keen also predicted that house prices would lower by 40% and they only lowered by about 3% in 2008. They then rose by 3% in 2008 and rose again in 2009 and 2010. Housing prices did fall by 2.7% in 2011.
Then there was the matter of the “bet” about house prices that he made with Rorry Robertson of Westpac. After losing the bet he had to walk from Canberra to Mount Kosciuszko sporting a T-shirt that reads “I was hopelessly wrong on house prices – ask me how.”
In 2010 Keen also predicted the end of “house flipping” and a sharp fast and dramatic decline in house prices. Once again this overly dramatic prediction did not come true. Housing prices have depreciated slowly by 2.8% in 2011 thus making it still possible to develop properties and resell them. This is especially true in places like Brisbane and in the suburbs of the Gold Coast where the demand for new and renovated family homes has risen.
Perhaps before reading Chris Zappone’s columns about the housing market it might be a good idea to consider that much of his material is sourced from Steve Keen and that in the past Steve Keen has often been incredibly inaccurate in his predictions. It might also be good to keep in mind that journalists make a living by exaggerating a crisis sometimes so that they will be read; this is true of any topic but it can very misleading when it comes to deciding whether or not to invest in real estate. Do your homework by talking to several agents and reading all of the information that you can about a housing market and then assess the situation.