A couple of weeks ago we were saying that real estate prices were about to go up big time, but ignore all that. According to Residex property prices in Australia are about to slump, just as they have in the USA and elsewhere. New figures from the property analyst group Residex show that house and unit prices in nearly every city and country centre fell last month, and that’s unusual. In fact, the last time that happened was just before the Great Depression in 1929.
“To see an adjustment going on a wholesale basis across the whole of the nation is incredibly unusual. Never in my lifetime have I seen so many converging negative events.”
– Residex chief executive John Edwards
So which way will Australian real estate prices go – up or down? There are so many competing opinions going around at the moment. Australian real estate might be overvalued, as is suggested by Steve Johnson from the Intelligent Investor:
“We think it’s 20 per cent too expensive. But you can mount a fairly convincing argument that if prices feel by 50 per cent, you still wouldn’t have a screamingly cheap property market in Australia.”
– Steve Johnson
On the other hand, perhaps our high prices are just a result of built up demand, and according to the ANZ that’s not slowing down.
It seems to me as though both issues – a struggling economy and high housing demand – will balance each other out, such that we’ll see a stable property market for a while yet. However, as most people seem to acknowledge, this all depends on inflation and interest rates.