Signs advertising homes, sold, for sale and under offer, are seen on a road in south London. (Reuters)
A question asked in 2012 is being raised again this time by Harry Dent, a book author, economist and demographer raised the spectre of a property slump in Australia in the next few years. He warned that property prices could go down as low as 50% in the coming years, causing median house prices in Sydney to tumble down to $381,584 from the present $763,169.
Mr Dent, who wrote the book The Demographic Cliff, pointed to the decline in resource prices and the burst of China's property bubble as the likely causes of a burst in the Aussie property bubble.
He added, "Bubbles always go up to the point where they just become affordable - and then they burst ... They burst precisely because they are so good."
He pointed out that home prices in Sydney and Melbourne are almost 10 times the income levels of residents, which was the same situation in California when the U.S. market reached a peak.
Mr Dent was in Australia to address the Save the Future conference and promote his new book.
He reckoned the decline in Australian property prices could be between 30 per cent and 50 per cent, adding that Australian property owners should start to worry about the fall of property prices beginning the first half of 2014 up to 2016.
However, other property experts disagreed with Mr Dent's prognosis.
Australian Property Monitor senior economist Andrew Wilson said that Mr Dent's prediction does not reflect the history or underlying strength of the Australian housing market's dynamics.
"The preconditions are not there ... There is no bubble to burst," Mr Wilson stressed, quoted by Fairfax Media.
While he conceded that the 2013 15 per cent growth rate of home prices in Sydney is not sustainable and this could lead to moderate growth or to flatten in 2014, he emphasised, "That's a long way short of a catastrophic fall in house prices."
On the other hand, Christopher Joye, a financial economist, accused Mr Dent of scaremongering.
Mr Joye said that the book author has been giving the negative forecast about the Aussie housing market without providing reference to any credible fundamental analysis. But he agreed there could be a possible house fall if the Reserve Bank of Australia would bring raise interest rates to 7%.
He added that the current record-low overnight cash rate and variable loan rates are completely and utterly unsustainable.