Australia could see a correction in residential property prices over the coming years because of the rising cost of living, Yellow Brick Road chairman Mark Bouris has claimed.
Speaking to Real Estate Business, Mr Bouris said any corrections in house prices would be based on the growing cost of living.
“It is very easy to say that there will be a correction but this is not because houses are too expensive but mainly due to the affordability issue,” he said.
Mr Bouris said the rising cost of living was leaving Australians with very little cash to spare.
“Say you were earning $150,000 in October 2009, after tax and your mortgage expenses, compared to today, you would have half the amount of money in your pocket,” he said.
“In today’s market after you make all your weekly payments, mortgage repayments, household bills, groceries and school fees you have half of what you had in 2009, so you are actually worse off today than you were during the GFC.”
Mr Bouris said the Reserve Bank needed to hold fire on monetary policy, with the prospect of higher interest rates “ridiculous”.
"Australian families are doing it tough right now,” he said.
“The news reports that the banking and mining sectors are recording record profits, yet the people I speak with in the street are struggling. Middle Australia, the engine room of our country, is being ignored and small businesses are closing down around us.”