The boss of one of Australia’s leading property development companies has poured scorn over claims of an imminent crash in house prices, saying notions about a significant downturn in residential property values are misguided and questioning where the catalyst would be for any major price decline.
Questioned at a Property Council of Australia lunch in Melbourne about warnings that house prices could fall, Stockland Chief Executive Officer Mark Steinert acknowledged his company was ‘cautious’ about the Sydney market, but said a crash in prices was unlikely.
“Where’s the catalyst?” Steinert asked, stressing that similar predictions over the past twelve months had not been proven to be correct thus far.
“Certainly, there has been a lot of talk for quite a while now about the imminent downturn in housing … but the reality is that we’ve got an economy in Australia that is growing at a moderate level of around two and a half percent on the back of a low dollar in particular, population growth that yes it’s slowed since the mining expansion but is continuing and metropolitan housing markets that are generally undersupplied.”
“So you have got population growth, you have got wages growth albeit modest, employment growth and undersupply in most of your markets. These are not the preconditions for some type of major national correction in our housing market.”
Steinert’s comments follow a research note in which Macquarie analyst James McIntyre suggested house prices in Australia could fall by as much as 7.5 percent over the next two years as slowing population growth exasperated an oversupply of apartments.
Residential construction starts, McIntyre said, could tumble from more than 200,000 in the year to March to 161,000 in the current financial year and then to 150,000 by June 2017.
Speaking at the Property Council function referred to above, Property Australian Super senior investment manager Christine Phillips said the high density apartment market could be moving toward a situation of oversupply in places like Sydney and Melbourne.
“Just the basic forces of supply and demand mean that you may have an imbalance there,” Phillips said.
“I do think that we are getting enough of those apartments for the time being.”