Housing market downturn next year: George Fokas
Investment mentor George Fokas is predicting a property market downturn next year.
He says job insecurity and an economic down-turn from a drop off in mining will lead to less investment in average price homes across Australia.
“I believe the property market will either flatten or drop a bit,” Fokas told Property Observer.
“The economy is not the best. Job security is a big issue, mining investment is going down and job security is going to be a big question.
“Because of that people won’t be buying property.
“Interest rates coming down confirms there is a problem with economy. Although rates are low right now a lot of people will be careful to get into the market before there’s certainty.”
He was unsure where specifically the market would be most affected but says the higher end shouldn’t be hit too hard.
“People who still have money will still invest. Average mum and dads won’t have the income to do it. They’re the ones people are pushing to invest in property.”
Fokas is in the minority though – many analysts are predicting a pick-up in the market.
Shane Oliver, the head of investment strategy and chief economist at AMP Capital, says property prices will likely increase next year.
“I think job security is likely to remain reasonably high but I doubt that will be enough to cause a property downturn. Interest rates will remain low and economy is likely to pick up as next year proceeds,” Oliver told Property Observer.
“I think job insecurity will gradually start to fade next year. We’ll be looking stronger. Insecurity will peak by the middle of next year and as the economy picks that will likely see the labour market take a turn for the better.
He says the Reserve Bank of Australia may raise interest rates which will keep a lid on the property market but says it won’t be enough to cause a downturn.
He says the mining boom has actually been detrimental to New South Wales and Victoria.
“The first phase of the mining boom which ended around 2007, 2008 – that was good for everyone. But that five or six years ago,” Oliver told Property Observer.
“I think the investment stage was actually a negative for states like New South Wales and Victoria because growth in those states was subdued to make way for growth in WA and Queensland. Retail was subdued, unemployment generally rose,
Friends of mine were losing their jobs during the period. I find it hard to believe the mining boom has been good for NSW. The only thing is it’s now fading which means the aussie dollar is falling.”
