World Economic outlook - australian property market forecast 2012 ; EXPERTS are lining up to contradict the extremist property analyst Steve Keen's prediction that the nation faces a drop of up to 10 per cent in house prices in 2012, with most forecasting moderate growth.
Releasing the Australian Property Monitors' property market outlook, senior economist Andrew Wilson tipped 3 to 5 per cent growth in median house prices nationally and for Sydney.
Keen, who was forced to take a hike up Mt Kosciuszko in 2010 after losing a bet that house prices would fall 40 per cent, this week forecast a drop of between 5 and 10 per cent next year because buyers would opt to pay off loans rather than take on more debt. So the same drops for Sydney, too? ''Something of that order,'' the University of Western Sydney professor confirmed.
But in contrast, Dr Wilson believes ''demand for housing will intensify'', pushing up prices.
Median house prices nationally had dropped 4.2 per cent over 2011, he said, and 1.6 per cent in the October quarter.
Sydney had fared the best of the capitals because of its underlying lack of housing and expensive rental market. The Sydney median house price had dropped 2.3 per cent - to $634,326 - over the year and dropped 1.1 per cent in the October quarter. The apartments median - now $450,775 - had grown by 0.5 per cent over the year but dropped 0.9 per cent in the October quarter.
Some of Sydney's regions fared better than others for the year, with the expensive regions dropping more than 6 per cent (see table).
The auction season wraps up this week, with 477 auctions across Sydney today. That's 12 per cent more than the same day a year ago, possibly because sellers have rushed to sell their property before the stamp duty concessions for first-home buyers expire on December 31.
Yet despite the announcement of the second interest rate cut in a row, international economic gloom may be taking its toll. Last Saturday was the weakest auction day of the year with a clearance rate of just 50.6 per cent.
Looking ahead, Dr Wilson said that since Australia's economic fundamentals were strong, the nation was well positioned to weather any downturn in international markets.
''This, coupled with renewed buyer confidence, will be the key to driving prices growth in the new year,'' he said.
He said that Brisbane, the worst performer this year with prices down almost 7 per cent mainly due to the devastating January floods, would bounce back between 5 and 10 per cent off the back of the resources boom. Likewise, Perth and Darwin. But Melbourne, due to big price rises in 2009 and 2010 and an apartment oversupply, could expect growth of between 0 and 3 per cent.
Monique Sasson Wakelin, managing director of Wakelin Property Advisory, said the two recent interest rate cuts would be the catalyst for growth and agreed with the APM forecast for Sydney and Melbourne.
''I think that would be about right, precluding anything terrible happening overseas.
''I can't see a national drop of 10 per cent, there hasn't even been that this year,'' she said.
Another property expert, Mark Armstrong of the auction tipping competition Property Tycoon, was also optimistic about next year.
''I'm the exact opposite of Steve [Keen],'' he said.
''I think it will grow by 5 to 10 per cent. All the indicators are that interest rates are going to fall in 2012 and cuts in interest rates tend to bring back the biggest group - the average home buyers.''
Shane Oliver, the head of investment strategy and chief economist at AMP Capital Investors, also disagreed with Keen. ''Didn't he forecast a 40 per cent drop a few years ago?'' he joked.
However, Oliver isn't as upbeat as the others, expecting a weak start to 2012 because of economic uncertainty. Over the year, he says prices could drop 1 or 2 per cent nationally but he is more optimistic about Sydney. ''I'm expecting modest gains over the year of maybe 1 or 2 per cent for Sydney,'' he said.
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