He's at it again!!Academic sticks to doomsday housing callBy...

He's at it again!!


Academic sticks to doomsday housing call
By Natasha Robinson
The Australian
July 08, 2009 12:00am
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+ - Print Email Share Add to MySpace Add to Digg Add to del.icio.us Add to Fark Post to Facebook Add to Kwoff What are these? CONTROVERSIAL economist Steve Keen has refused to back down from his doomsday prediction that house prices in Australia will almost halve over a decade despite growing evidence to the contrary.
Nine months after his dire prediction that property prices will fall by 40per cent over 10 years, fellow economists have pronounced Professor Keen - who was held up as one of the few commentators to see the global economic downturn coming - "spectacularly wrong" on his outlook for the housing market.

Professor Keen, an associate professor of economics and finance at the University of Western Sydney, was so convinced the bottom would fall out of the housing market that he sold his two-bedroom apartment in the inner-city Sydney suburb of Surry Hills in October last year to avoid financial pain from the predicted downturn.

But an analysis of price trends in Surry Hills suggests that had Professor Keen held on to the apartment, he would have realised a capital growth of about 7 per cent, The Australian reports.

According to property data agency Residex, the apartment market in Surry Hills experienced an average capital growth rate of 7.08 per cent in the year to May.

But Professor Keen insisted yesterday that Australia was on the cusp of a prolonged depression "in which house prices will fall as collateral damage".

The ending of the Federal Government's boost to first-home owners would soon result in a marked drop-off in demand, he said.

Professor Keen's colleague in the UWS school of economics and finance, senior lecturer Kevin Daly, described his predictions as the economic equivalent of a tsunami and extremely unlikely to bear out.

Macquarie Bank's interest rate strategist Rory Robertson said he had always regarded Professor Keen's predictions as "extreme".