Experts agree - no major real estate price bust 

16 July 2004 

A group of economists and bankers surveyed by The Age newspaper as part of its annual survey on investment and economic performance in Australia, have predicted the outlook for property over the next few years will be a softening of prices followed by another upturn.

Mr Michael Blythe, Commonwealth Bank Chief Economist said house price falls across the entire market were unlikely because major shocks from employment and interest rate rises were not expected. “There are parts of the housing market where arguably things have run too far and prices may need to pull back…just as in every housing cycle”, Mr Blythe said. 

AMP Chief Economist, Mr Shane Oliver agreed that without a major rise in unemployment or interest rates house prices would only flatten. 

Chief Economist at the National Australia Bank, Mr Alan Oster believes house prices will remain stagnant for the next two years and will not experience any major falls. 

Peter Brain from the National Institute for Economic Research said house prices are likely to fall by between 10-12% over the next few years but will be followed by a recovery. 

Macquarie Bank Senior Economist, Mr Richard Gibbs, said “We expect a period of stagnant prices as there is little risk of a major crash in the dominant owner occupied (housing) sector”. 

Melanie Hay, an ANZ Senior Economist, said the most likely scenario for house prices was a period of modest price increases, punctuated by occasional price falls. 

All these opinions are good news for home owners and investors with prices unlikely to experience serious downturns, or busts, as some economic and property commentators had been predicting earlier in the year. 

Watch this space for future updates.