John McGrath says Harry Dent doesn't get it on Sydney housing
John McGrath, the McGrath Estate Agents founder, has slammed Harry Dent’s forecasts on Australian property.
In a column published in Switzer Daily, McGrath noted Dent was echoing Australian housing bubble predictions he made in 2014 and 2011, despite them being proved wrong.
McGrath criticised Dent for failing to account for the “ingenuity of Australians, not to mention our long-embedded culture”.
Dent admitted, in a Channel 9 interview and one to the Daily Telegraph, that his predictions in previous years had been off the mark but maintained Australian property was in a bubble that would inevitably burst.
McGrath said Dent lacked an understanding of the local housing market, typical of overseas commentators who did not understand the local housing market.
“I can understand why Dent would look at Sydney, in particular, and think it’s overvalued.
"That’s how it might look on paper to an analyst who doesn’t understand how things work here,” McGrath wrote.
"Good quality Australian real estate, held over the long term, is one of the safest and most reliable asset classes you’ll find anywhere in the world.
“He fails to take into account all the unique factors that have kept our property prices growing while also protecting our market from collapse.”
Strong population growth was not the only reason the market weathered the GFC relatively unscathed, according to McGrath.
High levels of prudential oversight in the local banking system and the high concentration of Australia’s total population living in Sydney and Melbourne ensured steady demand for housing, despite high prices, he said.
Dent’s forecasts also failed to account for issues such as Sydney’s geography, which has encouraged a housing undersupply, McGrath said.
“When you’re having a growing population that is very concentrated around a small group of cities — and two in particular, you’re going to have much greater stability in home values no matter how high prices go,” he said.
“Additionally, in major growing cities like Sydney where urban sprawl has gone about as far as it can, we now have a chronic undersupply of new housing that is also serving as a strong foundation for ongoing growth.
“On top of this, we have low unemployment, a strong and resilient economy, low interest rates, a tax system that rewards property investment and a growing market of international buyers.”