Australian property commentators have lined up to slam predictions made by a US real estate analyst that property prices here are set to dive by as much as 60%.

Jordan Wirsz, who has been promoting a webinar on Australian property, has predicted that rising interest rates, peaking commodity prices and slowing demand from China for Australian resources will combine to flatten Aussie house prices.

Claiming that the rot will set in over the next couple of years, with a slow recovery not starting until 2016, he has urged investors who don’t plan to hold on to their properties for more than seven years to seriously consider selling.

Predicting “overvalued” and “speculative” capital cities would be the hardest hit, he claimed that the only winners from Australia’s property apocalypse will be the real estate agents making commissions on mortgagee sales.

A 60% drop in property prices in our capitals would create house prices that haven’t been seen for decades. Based on Residex figures, for example, Sydney’s median price would fall from $656,000 to $262,400, Melbourne’s would fall from $574,000 to $229,600 and Perth’s would drop from $469,000 to $187,600.

Unsurprisingly, Wirsz’s gloomy predictions have been met with incredulity by Australian-based property researchers.

BIS Shrapnel senior manager, residential, Angie Zigomanis singled out various economic factors that will keep Australia’s property market stable. Not least, he points to the fact that interest rates have fallen, and are not rising, and that – if Wirsz’s predictions of slowing demand for Australian resources and crashing house prices come through – interest rates would be reduced further, not rise.

He pointed to BIS Shrapnel’s view that, even with the slight slowing of the Chinese economy, commodity prices will still be able to underpin new investment in more capacity. Moreover, those resource projects that have already commenced “are now well underway and will be difficult to stop prior to completion even if China weakens further”.

“Any scenario as dire as Jordan Wirsz’s would require a significant increase in unemployment –beyond double digit rates – that would cause home owners to be unable to meet their mortgage repayments and push forced sales onto the market where the vendors would be forced to accept any price,” he added. “Otherwise, in a weaker market, home owners will just remain in their current dwelling and pay down debt with little declines in prices.”

ANZ head of property and financial system research Paul Braddick, too, is among the many Australian based economists that disagree with Jordan’s apocalyptic forecasts. He pointed to ANZ’s Australian Property Outlook for further explanation of the fundamental strengths of Australian real estate.

The report notes that, while the European debt crisis continues to destabilise financial markets, and the risk of a marked slowdown in China have hit sentiment, Australia’s resource industry has remained solid.

“The key medium-term thematic for Australia remains the unprecedented surge in resource and infrastructure investment,” notes the report.

The ANZ team does recognise that confidence in the property market has been shaken by the economic uncertainty that’s being fanned by the European debt crisis, a slowdown in China and the threat of a renewed global downturn, but points the finger at doomsayers such as Wirsz for adding to weakened confidence in the property market.

“Continued predictions of an imminent collapse in Australian house prices by some commentators have weighed on market confidence,” says the report.

However, while the report predicts prices to ease in the next 12 months, it cites several economic fundamentals that point to a “cautiously optimistic” view of Australia’s property market prospects.

“We maintain a cautiously optimistic medium term house price view supported by a robust economic outlook, low unemployment, flat to falling mortgage rates, improved affordability and a further tightening of the housing demand/supply balance,” says the report.

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