The prediction comes during the second week of the spring selling season, with some property experts more hopeful after auction clearance results rose slightly in both Melbourne and Sydney.
Harry Dent, who is in the country to promote a new book and also recently said the Australian market would fall by 60%, has told AAP that the sovereign debt crisis will extend beyond Europe next year and affect the United States, China, and Australia as well.
"Australia is probably the best place in the world to survive this, but we do think Australia will not escape as well as it did from the last crisis (in 2008)," he said.
"People in places like Sydney or Tokyo or Miami say, 'Hey, real estate can never go down here, we're a great place, everyone wants to move here, there's not much land for development', and what I say is that is exactly the kind of place that bubbles."
Dent has commented that Australia has the most expensive housing in the world when compared to household income levels. He says that because baby boomers have finished up spending in the market, prices are set to deflate.
But he also says the global economy is set to experience a crash due to sovereign debt, and that other assets will suffer as well.
"Gold and silver are going to crash, they're a bubble," he said. "Once we write down all these crazy debts, we are going to destroy a lot of dollars that were created in the boom and that makes the (US) dollar a lot more valuable."
Dent's comments echo those of Australian economist Steve Keen, who said that prices in Australia would fall 40% over a 10-15 year period, beginning in 2007. However, other economists have criticised such predictions saying they underestimate the complex nature of the Australian housing market, also criticising methods such as comparing average household income to property prices.
Meanwhile, a jump in auction clearance rates has prompted some property watchers to become more hopeful the market will recover over the next three months, although rates in Melbourne have remained static.
According to the Real Estate Institute of Victoria, the state recorded a 55% clearance rate, the same as last week, and down from 70% during the same period last year.
"While buyers and sellers alike will have welcomed the decision by the Reserve Bank to keep interest rates stable it has not been enough to cause a substantial improvement in the Melbourne auction market," chief executive Enzo Raimondo said in a statement.
In Sydney, the city recorded a clearance rate of 60.7%, while Adelaide and Brisbane both recorded rates of 53.1% and 30% respectively.
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written by connaust, September 12, 2011
Your $400k house will be worth round $300k.....
If house prices reach this level the entire economy will have fallen apart and we will have London style riots in the streets. House prices will be the last of our concerns.
20% drops maybe (I think we had 17% in the great depression?) but 60%? Nutbag.