John McGrath brushes offshore speculation on Aussie real estate

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The head of a major real estate franchise has warned buyers and sellers to ignore doom and gloom predictions about Australia’s property market from overseas commentators.

Chief executive and founder of McGrath Real Estate, John McGrath, believes the strength shown by auction markets across Australia, in particular Sydney, in early 2016 shows that predictions by commentators such as the US based Jonathan Tepper of catastrophic price corrections in Australia are wide of the mark.

“It seems every year an off-shore expert takes a look at our property market and decides it’s headed for Armageddon. The fact is you cannot bring an American mindset into any analysis of the Australian property market,” McGrath said.

“It ignores the high level of prudential oversight applied by the banks in Australia which are amongst the best in the world and the fact that we do not have questionable financial products such as the non-recourse loans that allowed irresponsible lending practices in America,” he said.

While he doesn’t believe house prices are set to fall off a cliff, McGrath said a price growth slowdown that had to happen is currently unfolding.

“We are talking about a market that has been undersupplied for many years, and that has been one of the key drivers behind the increase in house prices,” he said.

“Now, thankfully we are beginning to see supply meet demand, and we can expect a slowing down in the rate of growth. Not a bust but a slow-down. This is something that had to happen if we want a sustainable real estate market and to see the next generation of home buyers have a chance of owning property.”

While price growth may be slowing over the near future, McGrath said there are still plenty of signs that those who view real estate as a long-term investment path will come out ahead.

“Real estate should always be considered a mid to long-term investment,” he said.

“If you follow the movements monthly, you may well see extreme highs and lows but over the course of two to seven years the graph evens out and it has proven to be Australians’ most consistent and reliable path to wealth and security. With continued population growth and a low interest rate environment, I believe all the factors that support a healthy property market are well and truly in place.”

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