Professor Steve Keen says Australian house prices will fall 40% within five years
Professor Steve Keen is back predicting that Australian house prices will fall by 40%.
Asked by Peter Swizter how long before house prices fall 40%, Keen says five years.
After the GFC he was tipping a similar housing outcome.
He says that day is nearing, as house prices in Sydney are down 14.5% from their July 2017 high, which is their worst fall since the early 1980s recession.
Melbourne prices are down 10.9% from their November 2017 highs, which also is their worst fall in the period since 1980.
Keen, who now resides in Amsterdam after teaching at the University of Kingston in London until recently, maintains that house prices are bound to fall 40%.
He blames the Reserve Bank, claiming it’s the most “brain dead central bank on the planet", and says APRA and the Royal Commission's restrictive bank lending impact will be behind the fall.
Keen says it will be a nightmare for house prices on nationally given household debt compared to our total production of goods and services (or gross domestic product - GDP) is the second highest in the world, only behind Switzerland.
Household debt compared to GDP is at 200% - the highest ever for Australia.
“The RBA and mainstream economists don’t understand the role of credit,” Keen said.
He compares us to the USA which, as a consequence of the GFC of 2008, where there was 39.8% fall in house prices.
