‘Put it in context’: REA boss Owen Wilson says house price falls not as bad as they seem

REA Group boss Owen Wilson has refuted claims by some of Australia’s largest banks that house prices could fall by up to 20 per cent over the next 18 months, pointing to record high listing volumes and rising rental prices which will force investors into the market.

Wilson said any decline in the amount people are paying for homes would not directly affect listing volumes and argued that any fall was coming off an abnormally strong property market.

The comments were made as the News Corp-controlled real-estate listings portal cracked the $1 billion revenue mark for the first time and declared a record final dividend of 89 cents per share, to be paid on September 15. Net profit climbed 25 per cent to $408 million.

“The relationship between house prices and listings, people assume they’re absolutely correlated and that’s not necessarily the case,” Wilson said. “A prediction of a 20 per cent pricing decrease…we don’t subscribe to that. We think they will go down something like 5 to 10 per cent over the next 18 months, but that is predicated on further rate rises.”

Commonwealth Bank economists predicted large falls in house prices after interest rate rises in June, forecasting peak-to-trough declines in dwelling prices of 18 per cent in Sydney and Melbourne over this year and next. NAB predicted that house prices could plunge more than 20 per cent over the next 18 months in Melbourne and Sydney and by 17.7 per cent across the country.

Wilson said listing levels for June were at their highest since 2013, and July figures were at the highest point since 2016. He said any fall in property prices needed to be put in context.

“We sent out two million buyer inquiries in July and these buyers are in the market knowing that interest rates have come up and knowing that they’ll probably go up further from here,” he said.

“The other part of the market that people don’t spend much time thinking about is the rental market. We’re seeing rental vacancies are still at record lows and rental rates have increased at double digits in many, many markets. What this will do is it will inevitably attract more investors back to the market.

“We need to put [house prices] in context with the price increases we’ve had over the last 12 to 18 months. If property prices fall from 5 per cent – we’re only back to August last year. If they fall 10 per cent – we’re only back to April last year. All we’re really doing is taking that froth out of the market.”