Economist who predicted Dot-com bubble warns Australia’s house prices could plunge by 50 per cent

An American economist known for his apocalyptic predictions predicts the Australian housing market could collapse by as much as 50 percent.

However, Harry Dent’s prediction was met with skepticism by some, as it was similar to similar predictions he has been making for over a decade, but which have rarely come true in that same period.

Mr Dent, an economic demographer and best-selling author on finance, warned about Australia’s poor house prices on Channel Nine’s 60 Minutes program.

“If you buy a house now, I predict you could lose as much as 50 percent in the next few years,” he told interviewer Dimity Clancey.

Mr. Dent had some clear advice for people considering buying a home and for homeowners.

“For a young person, my advice is very simple: if you haven’t bought your first house yet, don’t,” he said.

‘If you sell now, you’ll have a head start on the rest. And if things go bad again, you can buy at least double the house for the same price and mortgage. That’s the advantage.’

In support of his prediction, Mr Dent said that during the last major economic crisis, US home prices fell by 34 per cent for average homes and 50 per cent for higher-end homes and that “people said that couldn’t happen”.

“I think this is a bigger bubble,” he claimed.

“I think it will start in the US in the second half of 2024 and spread.

“I think the US is going to have a recession that will spread all over the world because this is a global phenomenon. The real estate bubble in particular is everywhere.”

Mr Dent is convinced that the global economy has been running entirely on government financial stimulus since 2008, which he believes is not ‘sustainable’.

“So much stimulus in the economy is like taking a strong medicine,” he said.

‘It can’t turn out well, you have to detox at some point, that’s what this is, a global ‘Debt, Real Estate, Asset and Financial Asset Bubble Detox.’

However, Dent’s warnings were trampled on by the ABC program MediaWatch on Monday evening.

Mr Dent believes there is a property bubble not just in Australia but globally, fuelled by government fiscal stimulus.

Presenter Paul Barry said Dent’s predictions of a “housing Armageddon” were part of a track record that was “not to be scoffed at”.

Barry showed that as early as 2011, almost every year on Australian television, Mr Dent predicted that the housing market would collapse within a few months.

In 2011, he gave the same advice to home buyers, namely that they should not buy a house, as he did on Sunday night.

“Any young couple who followed Dent’s advice in 2011 would be in serious trouble and locked out of the housing market, as house prices in major cities have doubled since then,” Barry said.

Barry pointed to a quote from property developer Harry Triguboff in the 60 Minutes story, in which he said that “demand has never been higher and supply has never been lower,” to explain why Mr. Dent’s predictions were unlikely.

Economist Stephen Koukoulas told MediaWatch that “it would be extremely crazy to think that hHouse prices could even fall by percentage points.

MediaWatch presenter Paul Barry was highly sceptical of Mr Dent’s prediction, calling his track record on the Australian housing market “outrageously ridiculous”

Mr Dent showed no remorse when MediaWatch suggested he retire because he had been wrong so often.

“I have always warned that this is a bubble, and I will continue to do so,” he told the program.

“If there are no signs of a crash by then, I will reverse my decision at the end of 2025 and retire. I am stunned, but for now I stand by my position.

Mr Dent can give a few examples of situations where his pessimistic view of things was justified.

He correctly predicted that the Japanese stock market bubble would burst in 1991, which it did, and he correctly predicted the long recession that would follow.

His warnings of a US housing bubble came true when a massive recession broke out in 2007, leading to the global financial crisis.