CoreLogic’s head of research, Tim Lawless, has dismissed forecasts made in a recent 60 Minutes report, which claimed that the recent housing market downturn could be sharper than some are predicting.
The 60 Minutes report, which included commentary from market analysts, a real-estate agent, a property investor, a home owner, and a liquidator, suggested that property prices could plunge by up to 40 per cent.
However, the CoreLogic analyst claimed that the recent slowdown in housing market conditions is “mild” compared to previous downturns.
“Even though we’ve seen values fall nationally, they are down [by] 2 per cent since the market peaked back in September last year,” Mr Lawless said.
“This seems to be a very controlled slowdown; we haven’t seen prices plummeting.
“In fact, if you look at the trajectory of decline compared to previous downturns, this is actually pretty mild.”
Mr Lawless was critical of some of the media reports that have emerged off the back of the recent fall in property values, and cited factors that he believes would continue to support demand for housing.
“As the market moves to a downturn, we do see some sensationalist reporting and some lack of balance,” Mr Lawless added.
“When you look at the housing market at the moment, there are still many factors that are supporting demand, particularly the fact that mortgage rates, even though they’re edging a little bit higher, haven’t been this low since the 1960s.
“We’re still seeing really strong population growth, and we’re seeing a rise in first home buyers taking advantage of the improved buying conditions in the market now.”
Mr Lawless’ comments follow a warning issued by senior academic at the UNSW Business School Dr Jonathan Reeves, who urged observers to interpret property market forecasts with “caution”, particularly when assessing local risks.
However, despite downplaying concerns over a sharp downturn, Mr Lawless recently warned that the slowdown in credit and housing market conditions could have broader ramifications on the Australian economy.
“Anyone directly or indirectly associated with housing finance has likely felt the pinch of heightened regulation and tighter credit policies,” Mr Lawless said.
“Mortgage brokers and lenders are the first industry participants that come to mind. However, the slowdown in lending activity has broader implications for a wide range of peripheral industries and revenue streams.”
Mr Lawless continued: “Less lending implies fewer home sales for real estate agents and developers, a reduction in building and pest inspections, less conveyancing for lawyers and a slump in stamp duty revenue for state governments.
“Generally, when people buy a home, they also splurge on household items such as appliances, white goods and home furnishings, so there is strong relationship with household consumption.”