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Consumers driven by intrinsics: thoughts, feelings, actions taken, or economists? Any astute investor and property specialist who has experience building a property portfolio had identified the gap between what the economists say and what they see to be true.
While economists predict a market crash, these astute investors see growth and increasing buyer activity. Recently one of the Big 4 Banks ran a survey about consumer sentiment when it comes to real estate – People [consumers] stated they expect property prices to rise The chief economist, however, is predicting prices to fall in line with their forecast
And if truth be told, the same modeling they have been doing for the last 5/6 years has proven them wrong at every turn. So who really knows best? They produced a survey, and the consumer responded, and they determined that the response did not match the model, therefore the response is wrong.
However, time and time again, evidence has shown that psychographics, how people feel, drives property markets a lot more than things like demographics and economics. How people feel, how they think and what their behaviour shows, which is a representation of their internal emotions and actions of the output, tends to be a much better barometer for market behaviour. People vote with their feet. People want to invest where they feel good, where they believe in the location. It’s what’s between the ears that drives markets more than interest rates, more than economic models. It’s about how people feel. So are the economists just banging the same drum and just ignoring the evidence that they’re seeing right in front of them. And who do you trust to provide good analysis on property markets?
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