An American economist famed for his doomsday predictions has predicted that Australia’s housing market could collapse by as much as 50 per cent.
However, Harry Dent’s prediction was met with skepticism in some quarters because it echoed similar apocalyptic predictions he has been making repeatedly for more than a decade, most of which have failed to materialize in that time period.
Mr Dent, a best-selling economic demographer and financial author, delivered his grim warning about Australian property prices on Channel Nine’s 60 Minutes.
“If you buy a house now, I predict you could lose up to 50 percent or so over the next few years,” he told interviewer Dimity Clancey.
Mr. Dent had clear advice for those considering buying a home and for homeowners.
“For a young person, my advice is very, very simple: if you haven’t bought your first home yet, don’t,” he said.
“If you sell now you will be ahead of the rest and then, when things go bad, you will be able to buy at least twice as much house for the same price and the same mortgage; that is the advantage.”
To support his prediction, Mr. Dent said that during the last great recession, U.S. home prices fell by 34 percent for the average home and 50 percent for the most luxurious, and “people said that couldn’t happen.”
US economist Harry Dent predicts a crash in the Australian housing market before the end of next year
“I think this is a bigger bubble,” he said.
‘I think it will start in the second half of 2024 in the United States and will spread.
“I think the United States is going to start a recession that will spread to the whole world because it is a global phenomenon, especially the housing bubble, which is everywhere.”
Mr Dent believes that since 2008 the global economy has been entirely driven by government financial stimulus, which he says is “not sustainable”.
“Having so much stimulus in the economy is like taking a powerful drug,” he said.
“You can’t function well, you have to detox at some point, That’s what this is on a global level ‘detoxification of debt and real estate and assets and the financial bubble.’
However, Dent’s stark warnings were ridiculed by ABC’s MediaWatch programme on Monday night.
Mr Dent believes there is a housing bubble not just in Australia but around the world, fuelled by government fiscal stimulus.
Presenter Paul Barry said Dent’s predictions of “a property Armageddon” were part of a track record that was “beyond ridiculous”.
Barry showed that as early as 2011, Dent had been predicting, almost every year on Australian television, that the property market would collapse within a few months.
In 2011, he gave the same advice to home buyers: They should not buy, as he did Sunday night.
“Any young couple who had followed Dent’s advice in 2011 would have been in a very difficult position and would have been priced out of the market because house prices in major cities have doubled since then,” Barry said.
Barry pointed to a quote from developer Harry Triguboff in the 60 Minutes article that said “demand has never been so great, supply has never been so small” to explain why Dent’s predictions were unlikely.
Economist Stephen Koukoulas told MediaWatch that “it would be extremely far-fetched to think that…House prices could fall by as much as one percent.
MediaWatch host Paul Barry was highly sceptical of Dent’s prediction, calling his record on Australian housing “beyond ridiculous”.
Responding to MediaWatch’s suggestion that he should retire after being wrong so many times, Mr Dent was unrepentant.
“I have not stopped warning, and I will not stop warning, that this is a bubble,” he told the program.
‘I will retract at the end of 2025 if there are no signs of a collapse by then and simply walk away, bewildered, but for now I am sticking to my guns.
Mr Dent can point to a couple of occasions where his pessimistic view was justified.
He accurately predicted that Japan’s asset price bubble would burst, which it did in 1991, and he also correctly predicted the long recession that followed.
His warnings about a real estate bubble in the United States were confirmed by the massive recession of 2007 that became the global financial crisis.