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ISCOVER
Staff Reporter
Professor Steve Keen’s notorious prediction of a 40 per cent fall in house prices has been slammed by BIS Shrapnel’s Frank Gelber.
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Speaking at the BIS Shrapnel economic forecasting conference in Sydney yesterday, Mr Gelber said predictions of a 40 per cent drop were “silly”.
“We have, in the past, had people coming out saying there is going to be a 40 per cent decline in house prices – that is not the way the housing market works,” he said.
“The fact is, house prices will continue to grow steadily. We believe we are looking at a pretty solid rise in house prices over the next three years. We are not expecting phenomenal growth, but we are expecting to see around 15 per cent growth nationally.
“House prices are not going to double like they have in the past, but I think the growth will be good enough to bring the investors back to the market, which is good because we need them.”
In 2008, Professor Keen told Australians there was “no point in paying a mortgage on an asset that is going to fall by 40 per cent or so in the next few years”.
Despite having his predictions proven wrong, Professor Keen repeated his beliefs to The Adviser last year, saying Australian properties could suffer a price slump similar to that seen in Japan.
“I have always said we will see property prices fall by 40 per cent over the next 10 to 15 years. In fact, I wouldn’t be surprised to see property prices fall by as much as 20 per cent in the next five years,” he said.
Mr Gelber said the comments were “sensationalist” and went on to suggest the strongest performers over the coming three years would be Western Australia, New South Wales (Sydney specifically) and Brisbane.
