For 25 years, real estate agent Adam Flynn has been dismissing fellow alarmists’ claims that Australia’s housing bubble is about to burst.
Now he believes his dark prophecy could come true.
Speaking to FEMAIL, the industry expert and real estate investor said that interest rate hikes in August or September, plus a potential further increase in November, would paralyse the market.
“The Australian housing economy will haemorrhage and everyone will suffer,” he said.
Mr Flynn works “on the front line” of the industry, selling homes, far from the bureaucrats at the Reserve Bank of Australia who keep raising interest rates in an attempt to curb inflation.
“They’re not listening to the conversations in real time, because of the 13 interest rate hikes; people are just hanging on by a thread,” he said.
‘The other day I was talking to a woman, a homeowner, who only had enough money in her account to buy her son new shoes for school.’
And it’s not just the bankrupt and financially illiterate who are reaching breaking point, he said.
Adam Flynn, pictured, has 25 years’ experience in the property market as a real estate agent and investor; he’s never seen things so difficult for so many people.
Australians, from budget-conscious first-time homeowners to those who had enough clout at the bank to secure loans for big homes worth millions, are in trouble.
Even once-rich property developers are now stretched to the limit.
“I’ve been talking to people from all walks of life. I’ve never seen a situation this bad. I think 30 percent of people with a mortgage in Australia are on the brink of collapse.
“They will break if rates go up, and many more will be on the brink of collapse.”
People will be forced to put their houses up for sale to pay the banks.
“There will be a rush to buy properties and the only way people can make one property look more attractive than another is by lowering the price,” he said.
“There is already a rush of homes for sale every spring. This will make things worse.”
The rush to remain competitive and sell quickly could lead to a drastic drop in house prices, according to the Melbourne-based real estate agent.
“We could see prices fall by as much as 40 percent; a hemorrhage like this will take years to recover,” he said.
“People won’t get enough back to pay the banks for their houses or to make another deposit. They will lose everything.”
He suggests that anyone who cannot afford further interest rate rises or who does not want to hold onto their property for years should sell it now.
Then there’s the problem: the fees that real estate agents charge sellers, he explained.
Mr Flynn expects property prices across the country to fall rapidly.
And it is preparing for a record number of homes flooding the market for a quick sale during Christmas and January, when things are typically quiet in the housing market.
Flynn says people will need to list their homes quickly to avoid problems with the bank, and they will need to keep prices low because otherwise, after a few months on the market, their homes will be outdated.
Especially if other sellers offer a lower price and take the property, buyers will think the more expensive home has problems.
“And people won’t have that time. They won’t be able to raise the price or calculate the interest and then lower it again. Banks will want to know that you are committed to selling.”
Flynn said the damage would not be limited to a specific location or tax bracket and would change Australia’s housing market and wealth distribution forever.
But a complete collapse of the housing market would not be bad for everyone.
“People who have never been able to own property, who struggle to get a deposit or a loan, will get their chance,” he said.
He said that come December, if there are two rate hikes in the next few months, people will be desperate to sell, which will create a buyer’s market.
If his prediction of a 40 percent loss is true, then people could get million-dollar homes for $600,000, he says.
“In my view, the RBA has no other way of combating inflation than by raising interest rates, but it would be hugely irresponsible for it to do so.”
Australia could have a new wave of first-home owners and a new economic class could emerge from the ashes, he said. And of course, the super-rich would continue to benefit.
“There are investors with cash waiting for this to happen. They will come and buy good houses at very low prices,” he said.
‘The next two years will be a buyer’s market until inflation stabilises.’
Then things will start to rebuild, little by little.
Flynn says the wave could start as soon as the day interest rates are raised, and that most people know they are already reaching their limit.
But it could be a two-stage process where others would rush to get rid of the property once they are unable to make the next payment.
Flynn had previously been confident in the market, saying there would be minor bumps but the bubble would never completely burst.
“I’ve never said that, and I’ve been in the industry through the global financial crisis, 9/11 and COVID,” he said.
Mr Flynn says anyone who is not financially or mentally prepared to stay in their home for the next three to five years should sell now, before prices fall.
