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The Sum Of All

The Sum Of All
February 1, 2022 Propertyology Head of Research and REIA Hall of Famer, Simon Pressley

In 2022, as with (literally) every year, there are a huge bunch of factors that influence property markets. Most factors have a positive influence in that they will add upward pressure to real estate values, while several other factors act as a ‘drag’ on asset values.

Human nature is to focus more on potential ‘negative’ influences than the ‘positives’. The psychologists of the world confirm that “humans are hardwired with a negative bias.”

And the world’s biggest lemon-suckers are quoted in the media more frequently than those with a balanced perspective. Those natural human tendencies are spoon-fed an unnecessary volume of negative rhetoric.

No wonder public perception often ends up being a significantly lower assessment than what actually eventuates.

What’s always important to remember is that the only way to properly evaluate any situation is to (objectively) consider the combined sum of *all* factors.

There are many more considerations than everyone realise.

Beware your ‘information’ sources and your own natural tendencies.

Pay attention to (but don’t obsess about) the factors which may act as a ‘drag’ on performance.

A few negative influences does not mean an *overall* negative result will be produced.

For example, throughout 2020/21, the international border closure and zero population growth was a key dragging influence that most people obsessed over. But that didn’t stop capital growth of 20 percent.

As always, there is a variety of factors that Propertyology has identified as probable negative influences in 2022.

The potential increase in interest rates has been prominent in real estate commentary for the last 12-months. But ‘talk’ is not a fundamental and property prices still boomed.

I suspect that interest rates will continue to dominate the media for several years. While I concur that rate rises are inevitable, I’m not the slightest bit concerned about the outlook for property markets across most of Australia.

Any bozo who is currently spooked by rate rises are merely highlighting their own inability to consider the drag of one potential negative in the context of all other factors.

Just to get back where they were 2.5 years ago, there needs to be five (5) interest rate rises. People coped fine back then, plus the net financial position of a majority of Australian households is far superior now compared to back then.

Impress your family and friends by sharing some home truths contained in our recent report on Australian household finances.

I produced this graphic to summarise a very long list of positive influences. A few are incredibly exciting.

Now and always, beware of natural tendencies and negative biases. The sum of all parts is what produces net results.

For those interested in what all those parts currently look like, Propertyology has replaced emotions and perceptions with facts, figures and objective commentary in our 2022 PROPERTY MARKET OUTLOOK REPORT.

As this below graphic shows, there are always big-picture things happening. But, contrary to an abundance of persistent negative commentary, property markets generally perform much better than what the doomsday commentary suggested it would. This includes umpteen years when interest rates and inflation increased.

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