Are press predictions about property prices reliable?

A hot topic in the newspapers and in the media generally over the last few months has, unsurprisingly, centred around predictions for the property market in 2009.

The Press seem to have no other options than to speak to the various estate agents for their predictions. Comments from all the usual suspects are sought and published. The general consensus amongst these estate agents seems to be the property market will fall anywhere between 15 and 30 per cent in 2009. Obviously no-one has a crystal ball and these estate agents can only guess what is likely to happen.

They may indeed be right but it is worth questioning whether estate agents have a vested interest in portraying the worse case scenario.

How so? Surely if they are painting a bad future then there will be fewer buyers inclined to purchase? On the surface this ism a reasonable argument.

A few years ago, one of the best agents we have worked with at Fridays, contacted us and admitted that the current market climate (this was in approximately 2001) was poor.

This surprised us as there was nothing in the Press to support this assertion and on the conveyancing side of things, we seemed to be relatively busy.

We pointed this out but he claimed it was very hard for him at the moment because the market was static. Elaborating, he explained that a static market is the worst market condition for an estate agent.

An agent actually prefers buyers and sellers to know exactly where they stand. In other words, an agent prefers either an obviously falling market or an obviously upward market.

In an upward market an estate agent can convince the buyer that if he misses out on this deal or does not make an offer or is too indecisive then the next deal will cost him a lot more.

In a downward market it is easier to convince the sellers to accept a low price because one can paint the picture that in six months’ time there is a strong possibility that he would achieve even less.

It may appear a sceptical point of view but whenever we read articles voicing estate agents predictions of a falling market or sharp decline in prices, we cannot help but think back to that estate agent’s comments and wonder whether or not the agenda here is to assist agents in educating sellers to reduce prices.

Ask yourself the question:

"Were these agents predicting a 25 per cent or 30 per cent decrease in value this time last year, or, were they advising buyers when viewing properties that they need to make a decision quick because the price of the property is likely to go up?"