Stockland, APM, REIQ and Switzer debunk headlines that Macquarie's 7.5% price dip prediction

Stockland, APM, REIQ and Switzer debunk headlines that Macquarie's 7.5% price dip prediction
Stockland, APM, REIQ and Switzer debunk headlines that Macquarie's 7.5% price dip prediction

The Stockland chief Mark Steinert expects house prices to continue to rise next year.

His forecast is by about 3 to 5%, rejecting this week's forecast by Macquarie Research of a 7.5% slump in prices between 2016 and mid-2017.

"There has been quite a lot of talk going on for quite a long time now about the imminent downturn in housing, but no one has mentioned that it hasn't actually eventuated," Mark Steinert told a Property Council lunch in Melbourne yesterday.

"The reality is the economy in Australia is growing at a moderate level of around 2.5%.

"We have a low Australian dollar, continued population growth (albeit at a slower rate) and metro housing markets that are generally under supplied.

"These are not the pre-conditions for some sort of general correction in housing," he suggested.

Macquarie Research forecast for a 7.5 per cent drop in property prices nationwide from next March attracted widespread attack.

Superannuation columnist Peter Switzer said the forecast "bordered on being stupid."

"Even though these economists’ predictions are guesses based on some economic analysis, one journalist writes: House prices are set for a 7.5% decline from March next year, with the resulting slowdown hitting the broader economy and risking recession, economists have warned.

"Apparently, Macquarie says the decline in house prices, nationally, could be 7.5% peak to trough, which is eco-speak from the high point to the low point, which seems pretty small, given the recent rises.

"Our house prices have risen in the past three years but most of it has come out of Sydney and Melbourne. "

"Roughly, it has gone from an index reading of 320 to 390, so a 7.5% decline peak to trough is hardly a huge drama that could lead to recession!

"In fact, given the double-digit rises in the past three years in Sydney, it would be a healthy correction," Switzer suggested. 

Dr Andrew Wilson, the senior economist at Domain's Australian Property Monitors, noted in the past decade, there had not been any national annual drops of more than 5%.

“Even in periods where we had prices falling, such as during 2008 when it was the global financial crisis, the national house price fell by just under 4 per cent after a significant period of higher interest rates,” Dr Wilson said.

“It would be an historical first and is unbelievably unlikely.”

The property market in southeast Queensland was steadily improving and all the latest data supported ongoing, consistent capital growth, the REIQ CEO Antonia Mercorella said.

"Sudden slumps were unlikely and any predictions of dramatic house price drops were nothing more than “crystal ball gazing”.

“The Brisbane median house price reached a new high of $610,000 in the June quarter following a trend of positive growth of around two percent since the June quarter of 2013,” Ms Mercorella said.

“Our data suggests that this trend will continue for the September quarter,” she said.

In Queensland, the average home loan is $319,328 compared with New South Wales’ average of $422,179 and Victoria’s average of $365,265, according to ABS data.

“In Queensland, the average proportion of family income used to repay a mortgage is 27.3 percent, compared with 35.5 percent in New South Wales and 32.1 percent in Victoria, according to REIA data.

“Household debt levels are just not comparable between Queensland and the southern states,” Ms Mercorella said. 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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