For 25 years, real estate agent Adam Flynn has refuted the claims of his fear-mongering colleagues that the Australian property bubble is about to burst.
Now he believes their dark prophecy may come true.
Speaking to FEMAIL, the industry expert and property investor claimed that a rise in interest rates in August or September, plus a possible further rise in November, would cripple the market.
“It (the Australian housing economy) will haemorrhage and everyone will suffer,” he claimed.
Mr Flynn works “at the coal face” of the industry – selling homes – far removed from the pen pushers at the Reserve Bank of Australia, who keep raising interest rates in a bid to curb inflation.
“They don’t listen to the conversations in real time, based on 13 interest rate hikes — people are just hanging on by a thread,” he said.
“Just the other day I was talking to a woman, a homeowner, who had enough money in her account to buy new school shoes for her child.”
And it’s not just the broke and the financially illiterate who are nearing breaking point, he said.
Adam Flynn, pictured, has 25 years’ experience in the property market as an estate agent and investor – he has never seen things so difficult for so many people
Australians, from budget-savvy first-time homeowners to those who had enough bankroll to secure multi-million dollar home loans, are in trouble.
Once again busy property developers are stretched too thin.
“I talked to people in every category. I’ve never seen it so bad. I think 30 per cent of people with a mortgage in Australia are at breaking point.
“They will break if rates rise – and many more will be on the brink.”
People will be forced to put their homes on the market to pay the banks.
“There will be a flood of properties and the only way people will be able to make one look more attractive than another is to lower the price,” he said.
“There is already a flood of houses on the market every spring. This will make it worse.’
The rush to stay competitive and sell quickly could lead to a drastic drop in house prices, according to the Melbourne-based realtor.
“We could see prices wipe out by 40 per cent – a haemorrhage like this will take years to recover from,” he said.
“People won’t get enough back on their houses to pay the banks, or they won’t get enough back on another deposit. They’ll just lose everything.’
He suggests anyone who can’t afford any more interest rate rises or who doesn’t want to sit on their property for years to sell now
Then there’s the sting in the tail – the fees estate agents charge sellers, he explained.
Mr Flynn expects property prices across the country to fall quickly.
And he’s bracing for a record number of homes to flood the market for a quick sale over Christmas and January, when things are usually quiet in real estate.
Mr Flynn says people will need to build their homes quickly to avoid drama from their bank and will need to keep prices low because otherwise, after a few months on the market, their homes will be old.
Especially if other sellers come in at a lower price and get ripped off. Buyers will think the more expensive house has problems.
And people won’t have that time. They won’t be able to set (raise the price) and charge interest and then take it down again. Banks will want to know they are serious about selling.’
Mr Flynn said the damage would not be isolated to a specific location or tax bracket and would change the property market and wealth distribution across Australia forever.
But a total collapse of the property market would not be bad for everyone.
“People who have never been able to own property, who struggle to get a deposit or get a loan will get their chance,” he said.
He said that come December, if there are two rate hikes in the coming months, people will be desperate to sell, creating a buying market.
If his prediction of a 40 percent write-off is true, then people can now secure $1 million homes for $600,000, he claims.
“In my view, the RBA has no other way to tackle inflation than to raise interest rates. But it would be extremely irresponsible for them to do so.’
Australia could have a new wave of first home owners and a ‘new money’ class could evolve from the ashes, he said. And of course the super rich would still benefit.
“There are investors with money waiting for this to happen. They will come in and buy good houses for dirt cheap,’ he said.
“The next two years will be a buyer’s market. Until inflation calms down.’
Then things will start to rebuild, slowly.
Mr Flynn says the wave could start on the day interest rates are set – with most people aware they are already pushing their limit.
But it can be a two-stage process with others rushing to offload the property after they can’t make the next payment.
Mr Flynn has previously had faith in the market, claiming there will be small bumps but that the bubble will never fully burst.
“I’ve never said that – and I’ve been in the industry through the GFC, 9/11 and Covid,” he said.
Mr Flynn says anyone who isn’t financially or mentally prepared to stay in their home for the next three to five years should sell now, before prices drop.