David Koch fires property market warning, but says there's no need to panic

Financial commentator David Koch says the Australian property market could start to look ugly over the next six months, however has suggested there's no need to panic and patience is needed.

"Like all investment classes, property moves in a cycle: up and down," Koch write in The Telegraph.

He said the cycle at the moment is definitely down, and it's been coming for quite a while.

"The signs have all been there: a massive building boom, a regulatory crackdown on foreign buyers, and banks tightening lending criteria," Koch said.

"All of these changes came off the back of an eight-year boom in property values along Australia’s east coast which, in some areas of Sydney, saw prices rise 70 per cent in five years.

"A year ago, at the peak of the market, there was general hysteria about home affordability and how first-home buyers were being forced out of the market because of crazy prices.

"Now, the market is rebalancing and affordability is improving in a controlled manner. It’s a good thing."

Koch said that instead of welcoming the change in cycle, the hysteria is now one of pending doom from a major property crash.

He is the latest to criticise the recent 60 Minutes property segment Bricks and Slaughter, which sensationalized the property market downturn.

Koch said that instead of welcoming the change in cycle, the hysteria is now one of pending doom from a major property crash. 

First analyst Martin North said 60 Minutes chose his least likely scenario of a market crash on the show, then SQM Research managing director Louis Christopher said he shot around 45 minutes worth of footage, in which only a minute was used.

John McGrath then called the episode "misleading and problematic."

Koch said to contemplate a cataclysmic fall of 40 per cent is just crazy, suggesting the Australian economy would need to be dragged into a global economic recession triggered by a US/China trade war.

He said unemployment would have to soar, immigration numbers would have to half and housing construction would have to continue at record levels.

Last month every capital city, expect Canberra, Adelaide and Darwin, saw its property values decline. 

Melbourne was hit the hardest, seeing a 0.9 percent decline over the month of September to bring its dwelling values down 2.4 percent over the quarter. 

Koch said the most at risk are the property owners who stretched themselves to make a purchase in the last two years.

"With the Spring selling season now underway, it is a vastly different environment than a year ago," he said.

"It has definitely turned into a buyers’ market while recent homeowners need to be careful these falling market values don’t put them on their financier’s watchlist."