Before the modern era began, many people thought the earth was flat because that was how it appeared to them. They even believed that if you walked to the edge of the world you would fall off, because they couldn’t see beyond the limits of their own experience which indicated that the earth both looked and felt flat. They couldn’t see the world from space, in the way that we can and realise that it is a globe. So even though it still looks and feels just as flat to us as it did to our forebears, we know the truth.
This is why it is so frustrating to hear so called experts talk about the housing market in the same way, stating that housing prices have doubled every seven or eight years, or that the best indicator of future performance is past performance, because that is how it looks and feels to them.
They are ignoring the facts, that housing markets have boomed at times in the past and at others have endured many years without any growth. That markets have performed well in some locations while they have gone backwards in others at the same time. Few experts predicted Sydney’s boom of the last three years, while many predicted that Brisbane’s housing market would follow Sydney, which it didn’t.
Yet despite these failures, these experts still hold to the notion that the past performance of the housing market is the best indicator of its future, even though the facts are clearly telling us otherwise. The reason they cling to this false hope is because they simply don’t understand how the housing market really works.
This is dangerous stuff, because the wrong information can mislead investors, and property is the biggest investment most of us will make in our lives. Being as fully informed as we can about the way that the housing market works is the only way that we can determine where to buy, what to buy, how much to pay and when to sell in order to get the best possible results.