No Mount Kosciuszko climbs but Chris Joye and Stephen 'The Kouk' Koukoulas in 20% price collapse stoush

No Mount Kosciuszko climbs but Chris Joye and Stephen 'The Kouk' Koukoulas in 20% price collapse stoush
Jonathan ChancellorDecember 7, 2020

Leading economists are getting hot under the collar over the future direction of Australian house prices.

Christopher Joye told his weekend Australian Financial Review readers that when residential prices do start sliding, it was not inconceivable that there could be "unprecedented 10 to 20% losses across the board."

The warning from the bull-turned bear caused the predictable kerfuffle with rival economist Stephen ‘The Kouk’ Koukoulas quickly offering Joye a bet.

$10,000 cash at risk, not the ascent of Mount Kosciuszko that Australia's chief doomsday economist, Steve Keen, undertook in 2009 after conceding defeat (well, partly anyway) in his gamble over house prices with the then Macquarie economist Rory Robertson. 

Keen honoured his bet regarding property price forecast falling by 40%, though even last month the specific details of that bet was still the subject of a defence by Stephen Keen in the columns of Property Observer.

The Kouk suggested yesterday that while he too was clearly worried about the current run up in house prices and could envisage house prices faltering as the RBA moves to a monetary policy tightening cycle, "Chris' view of such large falls seems to be askew.""If house prices do fall 20% or more at any stage between now and the March quarter 2017, I will give him $10,000 in used, non-consecutive $100 notes," the Kouk blogged.

"If he is wrong, all he has to do is give me $1,000."The Kouk's offer was quickly declined with Joye's ensuing advisory that he wasn't actually predicting the 20% fall, rather just saying it is a risk.

The Kouk says walks to the Snowy Mountains or nude runs around Martin Place were not his bag, so he was open to suggestions on any alternative wager.

The issue Joye worries most about is that home value rises are outstripping incomes.

"Australian dwelling prices have jumped more than 10% over the year to March 2014.

"In Sydney and Melbourne, which make up 55% of the metropolitan population, home values leapt by 15% and 11%, respectively.

"Yet disposable incomes per capita only rose by 1.7% over 2013," Joye wrote.

Last week the RBA Governor Glenn Stevens repeated his regular warning that continuous house price growth were unsustainable, reminding everyone that prices can fall.

In a speech last week in Hong Kong, Glenn Stevens noted that dwelling prices nationwide have lifted 10% over the past year to 5% above their peak in 2010.

"We need to be alert to the possibility that the past year of strong rises in dwelling prices leads people to assume that this is the norm”.

All 33 economists tip rates will remain steady today, according to the Bloomberg survey. 

Just the one economic outfit, Market Economics Pty Ltd predicts a rate rise in May. That's Stephen Koukoulas.

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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