In this month’s issue of Australian Property Investor magazine, academic and oft-described property doomsayer Steve Keen takes on economist and property analyst Christopher Joye on the subject of house prices. Let the sparks fly!
A turbulent few years for property increasingly looks to be behind us and positive data continues to trickle in. Does this mean property markets will have a bumper year?
Keen argues that traditional growth fundamentals like population growth can’t be relied on as a sure-fire driver of prices. In fact, he points to falling mortgage debt levels as a sign that home purchases have slowed. He describes the recent modest lift in prices in some markets as a “suckers’ rally” and believes the 2010 recovery was driven entirely by government stimulus measures.
In Keen’s view, the boom days are over – for good. It’s unlikely sustained property price increases will be above inflation, he says.
Joye has a far different view, and thinks house prices have stabilised and are on the way up again. Rates are lower, GDP (gross domestic product) data is solid, household incomes are rising and real estate is more affordable. The fundamentals are strong, he believes.
He describes Keen’s forecasts as flawed, including the quoted prediction in 2008 of a 40 per cent house price slump, and holds no punches in his views of his “regular sparring partner’s” housing credentials.
These two fiscal foes go head-to-head in a captivating and tense war of words over the prospects for property in 2013 and beyond. Check out the full debate in the March issue of API, on sale now.
Who do you think is right? Share your thoughts and deliver your verdict.