Aussies to run to bricks and mortar as confidence declines

by Adam Smith24 May 2012

A pair of leading economic analysts have claimed that sagging consumer confidence could actually benefit mortgage brokers.

Speaking to the MFAA Convention in Adelaide, senior journalist with The Australian George Megalogenis claimed that in times of economic uncertainty, the Australian housing market has historically reaped benefits. He pointed to a run-up in house prices following the recession of the 1990s, the introduction of the GST and the GFC.

"In times of financial stress, the first thing the Australian consumer does is go to bricks and mortar," he claimed.

Megalogenis predicted that house prices would begin to rise over the next year as Australians fled other asset classes.

JP Consulting director and author of The Pain Report Jonathan Pain agreed.

"The environment of uncertainty could be beneficial to property values over the next 12-18 months," he said.

In spite of the possibility of a bump in values, neither Pain or Megalogenis anticipate property values rising sharply in the near future, and Megalogenis commented that Australian property was overvalued.

"You have to ask if we are going to reach a situation where home ownership is denied to the middle class," he said.