Aussie property could drop 50% or more

Mister Dent makes his money spreading doom and gloom. Sensationalist statements like "Aussie property to drop 50%" makes for great headlines and sells books/seminars, etc.

He has made a career out of spreading doom and gloom for decades now so I would take anything he says with a hefty pinch of salt.
 
mflying said:
See link

http://www.news.com.au/finance/real...ssie-home-prices/story-fndba8uq-1226816510923

I agree with some of what he says in above article.

I also see ppl are paying 100-150K more above reserve price on property at auction in most metro city for property price circa $500-$700K

However, falling between 40%-90%, sounds very scary and hard to digest!

What do you guys think?
Click to expand...

if property fell by 40% across the country, you wouldnt have a job, your house would have probably been torched, and I doubt any shops would be open to sell any food,

ie housing will be the last thing on your minds

as for a 90% drop, I think I have a better chance of getting with Taylor Swift
 
I'm no economic expert, so this is purely opinion as a consumer. I'm ready to be chopped on the table :eek:

A drop 30-50% in Australian market
- possible, as you said, if someone paid $150-$200k above the supposed market value and it happens so many times that the median price increased significantly, then overtime it will correct itself and median will drop.
however
- I don't see this happening countrywide. Probably on some suburbs/ cities.

Bubbles burst because property become unaffordable
- Disagree. Unaffordability is relative. e.g. $500K apartment in United States might be considered really expensive (I'm talking in general here, have no idea what US market is like), but is affordable for a working couple in Sydney on the average salary.
- My definition of unaffordable is when you need to pay $600K for a 30 sqm apartment and salary about $2000-$3000 per month (Hong Kong is an example).

Bubble might burst as China having downturn
- No idea. Probably? But would it really affect the property market directly, or will it be because it affects other factors which then cause a crash?
 
I read Dent a couple of years ago, same stuff, different date, nothing new.

Difference is this guy is from USA predicting doom and gloom for Australia, last time it was Keen at least he was Australian, did not help though:rolleyes:

To be successful in property.... rule 101, ignore this stuff/economists always get it wrong, pay attention to what is happening on the ground and jump in when the market starts rising. Its not rocket science supply vs demand, that is all anyone needs to know.

That's my rant for the day

MTR:)
 
A 50% drop could occur if:

1. High-end, clifftop mansion property was bought at the absolute top of a silly/crazy boom by an emotional extremely high income earner.
2. The owner got carried away and paid above the odds during such boom; using a large chunk of his cash which was burning a hole in his pocket (the Bank would only lend him 50% anyway due to servicability), and a bit of equity from his holiday house at Blairgowrie.
3. 6 months later the stock market crashed and the said owner was retrenched from his job and the whole r/e market slumped as a result of said crash.
4.Owner missed a few loan repayments and the Bank started calling.
5. Owner sold in a hurry at a firesale price to clear Bank loans.

If you own standard middle-of-the-road resi property....ignore points 1 through 5.
 
"I read Dent a couple of years ago, same stuff, different date, nothing new."
---
My thoughts exactly. His specialty is stocks/bonds, consumer spending and making forcasts based on these patterns. Credit to him for predicting US stockmart increases etc the past. Australians have quite a high income to the rest of the world and very low unemployment. This would need to change dramatically for a significant drop. Also, 50-55% of Oz population is based in 4 cities, where most of the employment opportunities are. There will be cycles of peaks and troughs, but can't see any massive price drop in the capitals.

"I see real estate going down 60 to 65 per cent in the US, it's probably more like 30 to 50 per cent in Australia, but that's still enough for you to say: Hey why would you go buying real estate?" - Dent :eek: I'm surprised there's no link to sign up to his investment fund at the end of the article, or one of his "best selling books". Everyone has their own interests, and his are clear.

As it's been said by previous posters - Supply and demand is right.
 
BayView said:
A 50% drop could occur if:

1. High-end, clifftop mansion property was bought at the absolute top of a silly/crazy boom by an emotional extremely high income earner.
2. The owner got carried away and paid above the odds during such boom; using a large chunk of his cash which was burning a hole in his pocket (the Bank would only lend him 50% anyway due to servicability), and a bit of equity from his holiday house at Blairgowrie.
3. 6 months later the stock market crashed and the said owner was retrenched from his job and the whole r/e market slumped as a result of said crash.
4.Owner missed a few loan repayments and the Bank started calling.
5. Owner sold in a hurry at a firesale price to clear Bank loans.

If you own standard middle-of-the-road resi property....ignore points 1 through 5.
Click to expand...


OK, you saved the day and I can now sleep at night I am going to now ignore 1-5;) BTW, do you have an economic background:p
 
In the Australian edition of "The great crash ahead", Dent has predicted the following:

"We see Australia's stock market crashing 50%-60% and your housing market declining similarly by 40% to 55% between early 2013 and early 2015"

It is early 2014 now and the house proces has gone up by 10%. So it has to crash by 50%-65% :D
 
Bring it on! I have cash and want development sites. In my area they sell for $600k to $750k.

If prices drop by 50%, I could afford at least 2... maybe 3 but I don't want to get greedy! :D
 
Singo said:
"We see Australia's stock market crashing 50%-60% and your housing market declining similarly by 40% to 55% between early 2013 and early 2015"

It is early 2014 now and the house proces has gone up by 10%. So it has to crash by 50%-65% :D
Click to expand...

First of all my advanced apologies to Singo :)

Say the price was $x.
Forecasted 40% drop mean the price is expected to be (1-0.4)x = $0.6x
But the price has increased 10% so far. So the price now is $1.1x
If his prediction to come true, price needs to come down by (1.1x - 0.6x) = 0.5x
0.5x as a percentage of 1.1x = 0.5x/1.1x = 45%

Similarly, if you use 55% drop then new drop needs to be 59%.

I'm not picking on a minor calculation. Percentages are a bit funny to interpret. If the share price drops by 50% then it need to increase by 100% to come back to it's original value.
 
Last edited:
Singo said:
In the Australian edition of "The great crash ahead", Dent has predicted the following:

"We see Australia's stock market crashing 50%-60% and your housing market declining similarly by 40% to 55% between early 2013 and early 2015"

It is early 2014 now and the house proces has gone up by 10%. So it has to crash by 50%-65% :D
Click to expand...
RK predicted a major stock market crash around this year....which will no doubt flow on to here in Aus.

So, it may still happen despite the recent happy days.
 
BayView said:
RK predicted a major stock market crash around this year....which will no doubt flow on to here in Aus.

So, it may still happen despite the recent happy days.
Click to expand...

Did he ? When was that ?

Did he also predict his own bankruptcy .....:rolleyes:

Cliff

( BTW , i Do have a lot of time for RK , just not when people go into specific timed predictions )
 
Truly Exotic said:
if property fell by 40% across the country, you wouldnt have a job, your house would have probably been torched, and I doubt any shops would be open to sell any food,
Click to expand...
Plenty of other countries have suffered 40% falls without any of these cataclysms, things would be tough and unemployment would rise but you'd still be able to buy your cornflakes at the supermarket.
 
wategos said:
Plenty of other countries have suffered 40% falls without any of these cataclysms, things would be tough and unemployment would rise but you'd still be able to buy your cornflakes at the supermarket.
Click to expand...

in australia, you'd be metrically stuffed , if it dropped by 40%

teh aust RE market is heavily tied in with every other market, plus the australian psyche is very "real estate" minded/proritised
 
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