As reported earlier, The Great Housing Debate was held on Tuesday between Coolabah Capital’s Chris Joye and economist Stephen Koukoulas (‘the Kouk’).
During the debate, the Kouk forecast that Australian dwelling values would only decline 7% peak-to-trough on the back of a lift in Australia’s official cash rate (OCR) to 3%:
“Peak to trough is minus 7%… That assumes 300 basis points of rate hikes from the RBA… So a 7% decline… My 7% fall is basically linked to Sydney and Melbourne doing a little worse than the average… So minus 7%. It will probably occur in the middle parts of 2023 to the latter part of 2023″…
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By contrast, Chris Joye “forecast that house prices nationally would fall 15% to 25%” off an increase in the OCR to 2.5%.
In an extreme case of revisionism and ‘juking the stats’, the Kouk has now proposed the following one-sided bet with Joye:
Seriously, what kind of bet is that? Why not set a bet that’s the mid-point between the Kouk’s forecast (7% fall) and Joye’s (20%)? That would be the fairer arrangement.
Think about it. If dwelling values were to fall 19% (within Joye’s range), then the Kouk would win $1,000 despite the fall being nearly three times his prediction of 7%.
We all know why the Kouk wouldn’t propose a fairer bet: because he would lose.