A top US real estate analyst has given a stark warning of a possible “bloodbath” in Australian real estate in the next couple of years, predicting that property prices in the country could fall by as much as 60%.
Jordan Wirsz, an advisor to numerous Fortune 500 CEOs and fund managers, told the Herald Sun that Australia was heading towards a property crash of a magnitude that would be far worse than the country has ever seen before.
Mr. Wirsz said that as the global economic downturn took hold in China and spread to Australia, the country’s real estate markets would be flooded by a tidal wave of properties as investors desperately tried to escape:
“Right now is not a time to be buying real estate in Australia. The market has slowed substantially but residential prices are likely to fall up to 60 per cent, possibly even more, within five years."
Land investments would suffer to a far greater extent than properties, added Mr. Wirsz, who predicted that these could plummet in value by as much as 80% to 90%. Further, commercial properties would also take a substantial hit, shedding around 50% of their value.
Artificially low interest rates, over-inflation of property prices, high loan-to-value lending practices, unrealistic expectations of vendors and the huge number of second mortgages were all cited as reasons why Australia’s real estate markets would suffer in the next five years.
Wirsz told the Herald Sun that he expected things to nosedive in Australia in around 12 months time, as interest rates rise, the price of commodities peaks and the demand for Australian exports in China slows down. State capitals would be hardest hit, claimed Mr. Wirsz, as these are some of the most overvalued property markets in the world and are much more speculative than non-urban areas.
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