Experts Split, Confusion Reigns

The property market always seems to evoke strong and conflicting responses from the experts. Some economists and pundits have been tipping Australian house prices to drop for the past decade or more.

The resilience has baffled many market pessimists with US Demographer Harry Dent the latest to predict a catastrophic collapse of up to 50% in Australian house prices.

Counter that with renowned local analyst Louis Christopher of Sqm Research who forecasts 20% growth in the Sydney market in 2014. It would seem that one of these experts has it seriously wrong.

Depending on whom you believe, now is the best time to sell up and exit the real estate market or its time to jump into the market with both feet.

Dent says Australian house prices will drop by 30 to 50% as the China boom comes to a crashing end. Dent was quoted as saying “This China bubble is going to back up on resource and commodity markets and it’s going to hit Australia hard and I think it’s going to cause your real estate to get hit and finally burst.”

The much more optimistic Christopher on the other hand recently went on the record stating “Our forecast last September for 2014 was 15 to 20 per cent and we hold by that,” he said.

“The market we’re going into is the hottest we’ve seen.”

‘It’s going to take some sort of trigger in the market to create a slowdown – for example a rise in interest rates, which we are not anticipating, or a sudden surge in new supply, or some sort of major global crisis.’

Dent would probably counter that an end to the China boom would create a major global crisis.

Christopher and others could argue that the end of the mining boom in Australia would ultimately assist other industries such as tourism and manufacturing that have been crushed by the high AUD. The resurgence in these industries will cushion the economy and the real estate market.

Given the term of a mortgage is up to 30 years, deciding whether to buy, sell or hold a piece of real estate in such turbulent times is better judged over the longer term. Acting in haste on short term predictions, can cause regrettable decisions when buying and selling.

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