Real estate guru: property prices have already crashed 10-20%

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In his weekend update, “Australasia’s #1 real estate coach and trainer”, Tom Panos, suggested house prices have already crashed 10% to 20% and is urging vendors to sell before the spring listings flood.

Panos also accused the average economist of living in “La-La Land”, given they are relying on market pricing information that is already three months old:

“Prices have held up reasonably well in winter because there’s been no stock. But that’s about to change my friends. There’s a lot of stock that’s about to hit the market. We are going to be flooded with listings as real estate agents return back from Mikonos and their overseas locations, and so do their vendors. And what we are going to see is a lot of stock hit the market”.

“This Tuesday we’ve got a rate rise. And it’s not going to be a weak one… It will be 0.5 minimum. And then my friends, we are going to enter September. And most likely more rate rises and more property hitting the market. This is going to be the test”.

“But there was an article yesterday from someone who basically said, ‘hey what are prices going to drop by?’. Man, I’m telling you straight they’ve already dropped. But don’t you understand the average economist lives in ‘La La Land’. Because they’re working off data. And data in real estate has roughly a three month lag. So you’ve basically got these economists and data specialists that are looking at data, but the market moves faster than the economists. That’s the problem”.

“So what they are doing is giving you historical information. And by the time they give you their view, guess what? The market’s moved again”.

“And I’m saying to you, right now in most parts of Australia minus Adelaide and minus Perth, those drops are 10%, 15%, 20%”…

“If you’re a seller right now, all I can say to you is why wait three months and put yourself in the spring catalogue with millions of other properties? Don’t do that. Put it on in August, short campaign… two week campaign. Third week, have an open then do the auction”…

Economist Stephen Koukoulas will be hoping Panos is wrong, given he has only tipped a peak-to-trough fall in Australian dwelling values of 7%.

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In all seriousness though, while there is some truth in Panos’ claim that real estate price data is lagged, CoreLogic’s daily index did only begin to plunge after the Reserve Bank first hiked interest rates in early May:

Australian dwelling values change from peak

Dwelling values fell after the RBA first hiked rates.

This alone suggests that CoreLogic’s daily index is not as lagged as suggested by Panos.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.