The danger of crying wolf!
Tuesday 16 May 2017
I’m sure everyone has heard of Aesop’s fable of the little shepherd boy who cried wolf. It is a story told to children for hundreds of years to illustrate the dangers of not telling the truth, but I actually think it is a lesson relevant to the residential property market today. Be careful of the consequences if you keep crying wolf.
Do you remember it? In the fable the bored shepherd boy enjoys the dramatic reaction to his story that a wolf is approaching putting in danger the flock and livelihood of the entire village. Do you see where I’m going with this?
I will concede there is a potential risk facing the Sydney residential property market at the moment. But before you panic let me be clear. The risk isn’t that the market and values are in any immediate danger. The market is strong. Demand is strong. The risk is we will believe the stories of impending doom are real. I would hate the market to react to those crying wolf.
To date buyers and vendors have shown impressive resilience to withstand the neverending naysayers. Remember two years ago was meant to be the end of the cycle. Wrong. Then last December the market was supposedly going soft. Wrong again. Quite to the contrary, it has been breaking records.
Of course the auction clearance rate is going to ebb and flow just as listing numbers are going to rise and fall, and yes, values may also adjust as a consequence. Take the latest statistics from CoreLogic showing that after an extraordinarily tight start to the year supply is finally now increasing.
Our team report buyers are excited at the opportunity to compete for those increased listings and demand is absorbing the growth in number of property on offer. Clearance rates remain above 75% and our team tells me that demand is still driving strong prices.
There is no need to cry wolf.
I think the Aesop fable we should be applying to the Sydney property market is the ‘The Lion and the Eagle’. It is less well known but teaches us to ‘try before you trust’. There are great opportunities out there