TRUSTING EXPERTS
TRUSTING EXPERTS
Who can investors trust?
One of the biggest problems for property investors is how to sort through the mountain of information thrust at them.
The best rule is: If so-called "experts" have a vested interest, be sceptical. If commentators are independent observers, you can begin to trust their comments. Perhaps.
The Housing Industry Association (HIA) provides a case study. Compared to the real estate institutes and the organisations representing developers, the HIA is a reliable commentator. It releases monthly statistics and provides market analysis that's usually worth reading.
But, still, the HIA represents the home building industry and has a vested interest in a buoyant property market. While you can generally trust their facts you need to be wary of their interpretations.
Early in January, the HIA published the latest home construction figures under the headline 'A WELCOME BOUNCE IN BUILDING APPROVALS'. It commented that "some strength has returned to Australia's new home building industry", based on approvals in November.
But no recovery was evident in the cold statistics.
Approvals fell in Queensland, Western Australia, South Australia and Tasmania - by anywhere between 3.1 and 7.6 percent - continuing a long-term negative trend. In NSW there was no change.
Only in Victoria was there an increase - of 19 percent. But, as everyone in the industry knows, this is an aberration caused by a State Government policy change. The Victoria Government cut its first home owner bonus from 1 January. And buyers rushed to beat the deadline.
It is only because of this spike in Victoria that overall national building approvals rose, slightly, in November. As the HIA itself notes: "For the rest of Australia, the orderly slowdown continues".
So why, then, would the HIA spokesman comment: "There appears to be a level of underlying confidence in the market that perhaps the worst has passed."
The answer is simple: The housing industry is desperate for some good news. However, despite the interpretation, there is none to be found in this set of numbers.
So where do investors find independent, trustworthy opinions on the market?
The best sources of untainted views are valuers (such as Herron Todd White), research companies (such as Australian Property Monitors), economists (such as Gerry Van Wyngen), credible journalists (not if articles are surrounded by real estate ads) and [many] buyers' agents.
Investors who follow the advice and opinions of most of these people, should be safe and profitable.
And those who opinions should be ignored? Real estate agents' bodies (typically the Real Estate Institutes) are the least trustworthy.
Investors who follow the advice of real estate institutes could lose a lot of money.
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This article is written by Neil Jenman, Author & Consumer Advocate.
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