How easy is it to forecast worldwide property price movements?

There will be times when you read the financial press and “experts” seems to have caught the market perfectly. This may entail calling the top of the market or indeed calling the bottom of a slump and very often the name of the expert in question gathers a reputation of its own. However, how easy is it to forecast worldwide property price movements and are the experts as good at forecasting as you might think?

Self-fulfilling prophecy

Some of the better-known names in the property industry seem to have a knack of calling the turning point of the market or the emergence of the new hotspot. This so called “self-fulfilling prophecy” syndrome is often built on a well-earned reputation but over the last few years the impact of such calls seems to have shortened. True, investors will sit up and listen when a well-known property investor talks and gives them advice but how long does the impact of this advice last in the minds of investors?

Calling a turning point time and time again

The success rate of so-called real estate experts is probably nowhere near as good as you might assume if you read the press after they have made a major correct call. Very often, if you look back over the previous few years, you will see that the same call has been made time and time again and eventually it has proved to be right.

At this moment in time we only need to look at the Australian and London luxury real estate markets to see areas of the world which have been classed as “overvalued” for many years now. Indeed these markets have received negative press comment for some time – eventually the markets will turn down with the experts returning to “cult status”. However, in this day and age everything which is written and everything which is said by so-called experts will be logged somewhere on the Internet. How good are they at calling turning points?

Has the Internet changed the real estate market?

In years gone by if you are looking to acquire property overseas you were literally at the beck and call of whichever experts/advisers you appointed. As you were not in possession of the same information they were able to obtain you wouldn’t have a deep seated understanding of the market and ability to forecast forward with some confidence. However, as we touched on above, the Internet has changed all investment markets around the world with information now available to everybody at the touch of a button.

Even some of the high end expensive property research will more often than not emerge free of charge onto the Internet putting many investors on a par, from an information point of view, with the experts.

Conclusion

Next time you see the headlines relating to a “good call” from a real estate expert maybe you should look back over the last few years and see how many times they have made that same call. Some experts will be selective with their opinions and they may prove to be correct more often than not but what you will find is that other experts make the same call time and time again and eventually it will come true. So, do all of these so-called property experts deserve their cult status?