Chris Joye has warned of a property price correction that could test the records. Yellow Brick Road founder Mark Bouris is not convinced it will land.
Joye, the founder and chief investment officer of Coolabah Capital Investments, is among the most bearish voices on Australian housing. He has warned of a “very big correction” that could test the previous records of 8% to 9% peak to trough, pointing to Sydney and Melbourne already sliding at double-digit annual rates.
He puts it down to two forces working together. He says the Budget’s negative-gearing changes and the rate rises “a double tap on the housing market.” On the Switzer Show, Peter Switzer put that call to Yellow Brick Road founder, Mark Bouris.
Bouris said he respects Joye, and wonders whether Joye still holds the same view after the June-quarter inflation figures (the original interview aired on the Switzer Show before the most-recent rate hold decision).
Bouris points to Westpac and the view of its chief economist, Luci Ellis, a former Reserve Bank assistant governor. Ellis walked back her call for further rate rises this year after the inflation number, though Westpac still does not pencil in the first cut until 2027. The cash rate has sat at 4.35% since May. “That pushes Chris’s thesis a bit to the back of the room,” Bouris said.
He will not call it over, though. Joye’s team runs 30 to 40 mathematicians and reads the tone of everything from Donald Trump’s musings to the Iran conflict, Bouris said, and the swing factor is oil. If the Middle East pushes crude higher, inflation feeds back through fuel and food, and “maybe Chris could be right.” Bouris notes the fuel excise ticks back up, and says the next real test is the next quarterly inflation read.
His own bet is that the Reserve Bank sits still at its next meeting, because the governor will not yet be convinced inflation is under control. Westpac’s own forecast is for a hold in August. “It’s too early to say anything,” Bouris said. “We’re in a waiting period.”
Mark Bouris was speaking with Peter Switzer on the Switzer Show.
