A television report alleging Australian home prices could crash by as much as 40 per cent in the next year has been slammed by property experts.
Titled “Bricks and Slaughter”, the 60 Minutes report by journalist Tom Steinfort focused on a “nightmare” scenario outlined by Digital Finance Analytics principal Martin North. It predicted “two-fifths of your home’s worth [would be] wiped out in just 12 months – 40 per cent in a year”.
“Many believe calling [current housing market conditions] a downturn is foolishly optimistic – the slump we are in is more like falling off a cliff,” Steinfort said.
“If numbers like that eventuate, there’s only one certainty: our entire economy faces catastrophe. The end of Australia’s property boom time.”
However, a new report from leading property data firm CoreLogic and Moody’s Analytics has poured cold water on the claims, forecasting more moderate declines in the nation’s home values as the slowdown continues.
Housing values in Australia’s capital cities have fallen by 2.5 per cent since their peak late last year. Apartment values were down 1.7 per cent, Moody’s reported.
“Australia’s housing market has been cooling through 2018, driven by the most populated and previously most inflated market of Sydney and, to a lesser extent, Melbourne,” Moody’s said.
“We expect national house values to fall by 1.6 per cent in 2018 following the 9.5 per cent gain in 2017,” Moody’s said.
National house values are predicted to grow by 0.6 per cent in 2019, the firm forecast.
In Sydney, house values rose 12.8 per cent in 2017, and are forecast to fall 5.1 per cent in 2018 before a “slow recovery” in 2019, Moody’s said. Apartment values are set to decline more slowly, down 0.2 per cent in 2018, followed by a slow recovery in 2019.
In Melbourne, house values are forecast to “decelerate sharply” from a 12.5 per cent rise in 2017 to 0.3 per cent in 2018 “on the back of declines in inner Melbourne areas”. The apartment market is expected to slow in 2018, followed by a sharper slowdown in 2019, Moody’s said.
House values across Brisbane are set to notch up a “mild” 1.5 per cent gain in 2018, “with strength in west Brisbane and inner Brisbane offsetting declines in South Brisbane”, Moody’s said.
“The worst is likely over for the apartment market: Values are tipped to recover by 0.6 per cent in 2018, followed by sharper growth of 6.2 per cent in 2019.”
Experts slam housing crash scaremongering
Property experts took to Twitter to rubbish the 60 Minutes story.
One of those featured in the report, SQM property analyst Louis Christopher, distanced himself from the story.
“I do not believe the Australian housing market is going to crash,” he wrote on Twitter.
“Sydney and Melbourne are significantly overvalued but I take the view the overvaluation will likely unwind over a longer period of time.
I stated in my interview with #60minutes the risks as well as the safety valves that are still present in the market. E.g strong local economies, strong population growth, banks very unlikely to fail, etc. The program covered my comments on the risks and overvaluation only. 2/
— Louis Christopher (@LouiChristopher) September 16, 2018
Mr North also weighed in on the debate, saying that the figures used in the program did not reflect his “central scenario” and that Channel Nine “chose not to cover” the more likely alternatives.
“My best call would be [property value falls] in the region of 15-20 per cent from top, over two to three years, but with some risk of a worse outcome,” he said.
“I believe 2019 will be the critical testing year one way or the other.”
As predictably bad as you knew the @60Mins housing beat-up would be, it was worse. Question: did they willfully ignore more balanced views, were they pig-ignorant of the subject, or just didn't care as they chased a scary story for eyeballs?
— Michael Pascoe (@MichaelPascoe01) September 16, 2018
I am not too sure of the modelling that went into forecasting a 40% housing price decline in 12 months as reported on @60Mins last night, but here's what valuation & affordability metrics look like in the unlikely event it did happen #ausbiz #ausproperty pic.twitter.com/NbpE5N4G5c
— Alex Joiner (@IFM_Economist) September 16, 2018
Another 40% Aust property crash call (Sixty Minutes last night). There have been lots of these over the last decade. I expect more falls in Syd & Melb over next 2 yrs but while a crash is a risk this note covered why its unlikely https://t.co/eQXtZJ2MCU #ausecon
— Shane Oliver (@ShaneOliverAMP) September 16, 2018