Investment mentor George Fokas is predicting a property market downturn next year.
He says job insecurity and an economic down-turn from a drop off in mining will lead to less investment in average price homes across Australia.
“I believe the property market will either flatten or drop a bit,” Fokas told Property Observer.
“The economy is not the best. Job security is a big issue, mining investment is going down and job security is going to be a big question.
“Because of that people won’t be buying property.
“Interest rates coming down confirms there is a problem with economy. Although rates are low right now a lot of people will be careful to get into the market before there’s certainty.”
He was unsure where specifically the market would be most affected but says the higher end shouldn’t be hit too hard.
“People who still have money will still invest. Average mum and dads won’t have the income to do it. They’re the ones people are pushing to invest in property.”
Fokas is in the minority though – many analysts are predicting a pick-up in the market.
Shane Oliver, the head of investment strategy and chief economist at AMP Capital, says property prices will likely increase next year.
“I think job security is likely to remain reasonably high but I doubt that will be enough to cause a property downturn. Interest rates will remain low and economy is likely to pick up as next year proceeds,” Oliver told Property Observer.
“I think job insecurity will gradually start to fade next year. We’ll be looking stronger. Insecurity will peak by the middle of next year and as the economy picks that will likely see the labour market take a turn for the better.
He says the Reserve Bank of Australia may raise interest rates which will keep a lid on the property market but says it won’t be enough to cause a downturn.
He says the mining boom has actually been detrimental to New South Wales and Victoria.
“The first phase of the mining boom which ended around 2007, 2008 – that was good for everyone. But that five or six years ago,” Oliver told Property Observer.
“I think the investment stage was actually a negative for states like New South Wales and Victoria because growth in those states was subdued to make way for growth in WA and Queensland. Retail was subdued, unemployment generally rose,
Friends of mine were losing their jobs during the period. I find it hard to believe the mining boom has been good for NSW. The only thing is it’s now fading which means the aussie dollar is falling.”
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
Your a cornicopian peter, in your eyes, every market, except the gold market, is going to go up up up and in the decades to come we will no doubt all be living in remodeled houses with synthetic sapphire windows where all our energy requirements are met from abundant nuvo renewable technologies.
Believing in a happy ending does not assure a happy ending, let me assure you of that. If that was the case median Australian capital city home prices would already be past $750,000 and well on their way to 1 Million. Just as the cornicopians preached at their seminars back in 2005. House prices peaked at around $500k, slipped back and then bumped up but have basically gone nowhere (except backwards in real terms) since 2008.
Real inflation adjusted terms. That is all that matters in this world of constant inflation. And by that measure home prices are back to 2002 levels now. They have a long way to catch up now.
Shadow was hopelessly wrong about the Gold Bull Market. What else is he wrong about?
Real inflation adjusted terms. That is all that matters in this world of constant inflation. And by that measure home prices are back to 2002 levels now. They have a long way to catch up now.
Where do you get this nonsense from Ted... Macrobusiness?
House prices are at 2002 levels in income adjusted terms - i.e. the house price to income ratio today is the same as it was over a decade ago (so no bubble).
However in real inflation adjusted terms, house prices are much higher. This is because both house prices and incomes have risen faster than CPI.
How far is gold down currently from the peak in real inflation adjusted terms? About 30% I think.
Face it Ted, you sold out of Sydney property and moved into gold at the worst possible time.
Sydney house prices are up 10% since you sold, while gold has crashed.
No wonder you're so angry... I love your new sig by the way... obsessed with me much?
Your a cornicopian peter, in your eyes, every market, except the gold market, is going to go up up up and in the decades to come we will no doubt all be living in remodeled houses with synthetic sapphire windows where all our energy requirements are met from abundant nuvo renewable technologies.
Believing in a happy ending does not assure a happy ending, let me assure you of that. If that was the case median Australian capital city home prices would already be past $750,000 and well on their way to 1 Million. Just as the cornicopians preached at their seminars back in 2005. House prices peaked at around $500k, slipped back and then bumped up but have basically gone nowhere (except backwards in real terms) since 2008.
Real inflation adjusted terms. That is all that matters in this world of constant inflation. And by that measure home prices are back to 2002 levels now. They have a long way to catch up now.
Cornucopian?
Sapphire windows - that would be nice - what colour? Sapphires come in many colours, not just blue.
I hate to disappoint you but house prices today are above the prices in 2008 in most areas. If you think that real prices have fallen, then haven't real debts as well.
I can't think of any credible forecaster from either the bull or bear side who is expecting house price falls over the next 12 months.
Can you name one?
I guess if real prices are back to 2002 levels it must be a good time to buy a house. Is gold at the 2002 real price? If not it must be a crap time to buy gold.
Any expressed market opinion is my own and is not to be taken as financial advice
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