'Deep gloom' has descended over housing market: Don Stammer
Don Stammer has suggested after the recent surge in house prices over recent years there has been "a reasonably orderly retreat".
However he noted a "deep gloom" has descended on the housing outlook.
"One interesting thing about being an Australian is we each are surrounded by 25 million housing experts," the adviser to Altius Asset Management and Stanford Brown Financial Advisers said.
"Google the phrase 'Australian house prices' and in 0.54 of a second you’ll have a billion items on that topic to consider."
Stammer says housing, and the economy generally, does not face the full fire of dire times now feared.
"But prospects are there’ll be a further, noticeable, fall in the median house price (5 to 10%), followed by an elongated slump in house prices.
"This will involve real pain for some home owners who purchased at the peak of the cycle, paid over-the-top prices or borrowed too heavily, especially where people lose their jobs or partnerships break up."
Writing in The Australian, he noted traditional concerns for housing — the high level of household debt and mortgage stress — are exaggerated.
"But newer worries, such as the impact on bank lending from the revelations of unfair practices by the royal commission and from the likely introduction of changes to negative gearing and capital gains taxes (if the ALP wins government) will push housing prices lower and constrain recovery."
He said it won’t be easy to maintain a balanced outlook.
"Each item of news on the housing market, including weekly auction clearance figures, will be dissected to see what unpleasant news it offers on the housing outlook."
He concluded by suggesting plucking a couple of numbers — gross household debt and mortgage debt — from the aggregated balance sheet of Australian households is not enough.
"These ratios do not include important “buffers” such as offset accounts, redraw facilities and prepayments making household finances more resilient."
