I actually legitimately hate giving this guy any more attention.
But the thought that there might be Gold Coasters who are currently fretting about Harry Dent’s latest ridiculous price prediction (or worse – banking on it to be true) has spurred me into action.
The U.S. based “economist” has gone on the record to say that Australian property prices could crash by up to 50% in the years ahead. He believes that we’re facing an epic economic crisis over the next 3-5 years that could be worse than the GFC – he’s even tipped it to be worse than the Great Depression. Talk about alarmist propaganda!
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There are a number of reasons why I believe this to be absolute hogwash. Here are the main ones:
He’s been wrong before.
In 2014, Harry famously and incorrectly that property values would dive by 50% following the GFC. They didn’t. In fact, many property markets boomed.
He has an agenda.
Harry is currently touring Australia to hawk his latest book. Want to know a really good way to get people interested in buying what you’re selling? Create massive fear – and then present what you’re selling as the solution.
He’s basing his predictions on rhetoric, not facts and figures.
“When young people have to pay 12 times their incomes for a house, that’s not good, so this is where the reset needs to come. I think you will have a recession,” he says.
I’ll give him a partial credit for that statement – in just one Australian city, Sydney, it requires a huge sum to get into the property market, though in the remaining 90% of the country, buying a property is not as unaffordable.
More to the point, mortgages are actually more affordable now than they’ve ever been.
Ten years ago, the repayments on a $300,000 mortgage were around $510 per week (at 8% interest).
Today, the repayments on a $500,000 mortgage are around $550 per week (at 4% interest).
Translation: the value of our properties may have gone up substantially, but the mortgage repayments required to keep them have not.
So, if you’re worried about Harry Dent’s forecast coming true, or you’re a first homebuyer who is hoping that it will, my advice is to think again. It’s about as likely to happen as Barnaby Joyce regaining his role as Deputy Prime Minister.