In defence of hoomers: launching the Big Aussie Short Hoomer Doomer Loser Index

Plus, compromise on the RBA Reform bill

The Urban Dictionary defines a ‘hoomer’ as ‘a person who insists that “hooms (homes) only go up” in value and deny the possibility of the real estate market being overvalued.’ Hoomers so defined no doubt exist. But based on the Melbourne Institute’s survey of house price expectations, a majority of the sampled population do in fact expect lower home prices from time to time (index values <100). This is particularly the case when we actually observe lower house prices. Most of the time, however, Australian house prices are expected rise over the year ahead because that is what happened over the previous 12 months.

Those who think the housing market is mostly made up of hoomers might argue that realised house prices are the product of self-fulfilling expectations. But to expect steady or lower prices when annual price growth is positive more often than not would be at best a biased forecast. The Melbourne Institute sample would appear to be more consistent with adaptive expectations, which is at odds with the definition of a hoomer and the notion of self-fulfilling expectations.