Why Australian house prices could still crash after rising by the third fastest pace in history

 

Editor's Comments:

A Major author agrees with my dire predictions for Australian real estate.

Editor Lawrence speaking at international property Expo in Singapore in 2006

It appears a few other experts are beginning to come on board with my prediction of bad times ahead for several real estate markets around the world. Primary those that have increased so fast the last two years which includes Australia.

In my January predictions for 2022 I predicted that prices would increase for the first half to three quarters of 2022 and then perhaps begin to fall dramatically.

Acid Test:

My acid test for real estate is very simple.

After 50 years of being involved in real estate I've discovered that if I cannot buy a three-bedroom home or apartment in any area of the world and rent it out for positive cash flow the end is near.

I don't if there's any properties and most of the major cities in Australia where you can find positive cash flow anymore.

Quite the opposite is true of Bali real estate which already had its crash and is beginning to show positive growth for the first time in several years. 

Check out apartments and villas selling for as little as $58,000

  Rich Dad Poor Dad author issues warning
 Rich Dad Poor Dad author Robert Kiyosaki worried about real estate speculation
He blamed Reserve Bank of Australia for pumping money into financial system
CoreLogic head of research Tim Lawless said housing market had likely peaked
Australian property price increase of 22.1 per cent in 2021 third fastest in history

By Stephen Johnson, Economics Reporter For Daily Mail Australia

Published: 05:06 GMT, 13 January 2022 | Updated: 05:32 GMT, 13 January 2022

Rich Dad Poor Dad author Robert Kiyosaki is expecting Australian house prices to crash after rising by the third-fastest pace in history - because of speculation.

House and unit prices in 2021 surged by 22.1 per cent in 2021, CoreLogic data showed.

In records going back to 1880, that was the third-fastest in Australian economic history.

Kiyosaki, whose bestselling book in 1997 talked up the importance of stable real estate investment, said too much of Australia's property market boom was based on the Reserve Bank of Australia pumping money into the financial system.

'It's good for a while. You guys can keep flipping houses, all this stuff, but I'm doing my best to warn you that something might happen,' he told Daily Mail Australia from Phoenix in Arizona.

'You can't just keep printing money.

'What worked up to 2022 may not work after 2022.'



Rich Dad Poor Dad author Robert Kiyosaki (pictured) is expecting Australian house prices to crash after rising by the third fastest pace in history - because of speculation


Between March 2020 and June 2021, the Reserve Bank gave $188 billion to the banks to provide cheap home and business loans, which Kiyosaki said led to real estate speculation

Between March 2020 and June 2021, the Reserve Bank gave $188billion to the banks to provide cheap home and business loans.

This Term Funding Facility program, to help stimulate the Australian economy during the pandemic lockdowns and restrictions, coincided with real estate speculation.

'You guys are a bunch of punters, you gamble a lot,' Mr Kiyosaki said.

'I watched your properties go up and up and up and up and I got out of there.

'There are too many Aussies and people all over the world, they're flipping houses.

'I've got to be ten times more cautious now because we have never been here, none of us have ever been here.

'None of us alive have ever been here.'

Mr Kiyosaki, 74, who owns apartments in Sydney's eastern suburbs - in Rushcutters Bay, Bondi and Randwick - didn't give specific forecasts on the extent of property price falls in Australia.

Tim Lawless, the head of research with real estate data group CoreLogic, said the Australian property market had most likely peaked.


House and unit prices in 2021 surged by 22.1 per cent in 2021 (pictured is an auction at Hurlstone Park in Sydney's inner west last year)

House price increases in 2021

BRISBANE: Up 30.4 per cent to $782,967

SYDNEY: Up 29.6 per cent $1,374,970

CANBERRA: Up 27.2 per cent to $1,015,900

HOBART: Up 26.7 per cent to $747,187

ADELAIDE: Up 25.8 per cent to $622,155

MELBOURNE: Up 17.9 per cent to $997,928

PERTH: Up 13.3 per cent to $553,013

DARWIN: Up 12.4 per cent to $565,080

Source: CoreLogic data on median house prices annual increases in December 2021

'Although we can't see any evidence that specific housing markets have peaked, it is clear that most markets have moved through a peak rate of growth,' he said.

'What I mean by that is the point at which markets achieved their biggest monthly growth rate.

'We saw most of the capitals moved through a peak rate of growth around March last year.'

PropTrack economist Paul Ryan noted the 22.1 per cent rise in Australian property prices, in 2021, was the third fastest in historical records going back to 1880.

Only 1989, with a 29 per cent annual growth rate during an era of 17 per cent interest rates, and 1950, with an 111 per cent surge after the war, had faster property price increases.

Brisbane's median house price last year increased by 30.4 per cent to $782,967 as Sydney's equivalent value went up by 29.6 per cent to $1,374,970.

'The only broad regions avoiding a slowdown in the pace of growth in housing values are Brisbane, Adelaide and regional Queensland,' Mr Lawless said.

'These markets are benefitting from a healthier level of affordability compared with the largest capitals along with a positive demographic trend and consistently low advertise stock levels.'

Sydney and Melbourne were expected to peak late this year.