Ausbiz – Property Panic? The outlook for Australia’s housing market
Today on Ausbiz, I pushed back on forecasts calling for a 20–40 per cent collapse in Australian housing prices. In my view, that outcome is highly unlikely given the way our system is structured.
Yes, prices can fall. But when you’re bringing in tens of thousands of people each month and vacancy rates are sitting around 1 per cent, supply simply isn’t keeping up with demand. That imbalance continues to support prices.
Then there’s policy. For decades, governments of all persuasions have introduced schemes to support home ownership, from low deposit programs to shared equity and access to super. With two thirds of households either owning or paying off a home, there’s no real incentive to engineer a sharp decline in prices.
Importantly, the banks, regulators and the Reserve Bank of Australian (RBA) are all aligned around maintaining stability. With the majority of bank assets tied to residential mortgages, a significant fall in prices would have broader consequences for credit growth and the economy.
That’s why I think a large-scale collapse is improbable. A pullback in parts of the market is possible, but I’d be more inclined to see that as an opportunity rather than a crisis.
Watch the episode via Ausbiz here: Roger’s reasons why the housing market wont crash
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
