Rich Dad Poor Dad author Robert Kiyosaki has warned Australians to be prepared for a massive economic depression – after predicting house prices will soon crash.
Kiyosaki has told his Twitter followers the ‘biggest bubble in history’ is going to burst with the real estate and stock markets to take a massive hit.
‘DO YOU HAVE a PLAN “B”?’ he wrote. ‘We are in BIGGEST BUBBLE in world history. Bubbles in stocks, real estate, commodities & oil. FUTURE?
‘Possible DEPRESSION with HYPER-INFLATION,’ Kiyosaki warned. ‘My PLAN B: be an entrepreneur, stay out of stock market, create own assets, use debt as $, save gold, silver, bitcoin, guns.’
His tweet comes as sanctions on Russia, for its Ukraine invasion, push up crude oil prices, adding to global inflationary pressures.
Higher inflation also means interest rates in Australia are more likely to increase in 2022, with the big banks now forecasting property price drops this year.
Rich Dad Poor Dad author Robert Kiyosaki (pictured, with wife Kim) has warned Australians to be prepared for a massive economic depression – after predicting house prices will soon crash
His tweet comes as sanctions on Russia, for its Ukraine invasion, push up crude oil prices, adding to global inflationary pressures.
Kiyosaki took to Twitter on Wednesday to warn his followers the ‘biggest bubble in history’ is going to burst with the real estate and stock markets to take a massive hit
Russian President Vladimir Putin’s Ukraine invasion has sparked sanctions on the world’s third biggest producer of crude oil, after Saudi Arabia and the United States.
This has pushed up global oil prices to US$130, the highest level since 2008.
Australian motorists in some postcodes are now paying $2 a litre for petrol and experts predict average prices could rise to $2.20.
Global food prices will also increase because the war shut ports in Ukraine, which is a major exporter of grain and vegetables.
Australian house and unit prices in 2021 surged by 22.1 per cent in 2021 – the fastest annual pace since 1989, CoreLogic data showed.
In records going back to 1880, that was the third-fastest in Australian economic history.
In February, Australia’s median home price stood at $728,034.
With a 20 per cent deposit factored in, an average-full time earner on $90,917 would have a debt-to-income ratio of 6.4 – a level higher than the banking regulators six threshold for mortgage stress.
Earlier this year, Kiyosaki, whose bestselling book in 1997 talked up the importance of stable real estate investment, said too much of Australia’s property market boom was based on the Reserve Bank of Australia pumping money into the financial system.
‘It’s good for a while. You guys can keep flipping houses, all this stuff, but I’m doing my best to warn you that something might happen,’ he told Daily Mail Australia from Phoenix in Arizona.
‘You can’t just keep printing money.
Between March 2020 and June 2021, the Reserve Bank gave $188billion to the banks to provide cheap home and business loans
Between March 2020 and June 2021, the Reserve Bank gave $188billion to the banks to provide cheap home and business loans, which Kiyosaki said led to real estate speculation
‘What worked up to 2022 may not work after 2022.’
Between March 2020 and June 2021, the Reserve Bank gave $188billion to the banks to provide cheap home and business loans.
This Term Funding Facility program, to help stimulate the Australian economy during the pandemic lockdowns and restrictions, coincided with real estate speculation.
‘You guys are a bunch of punters, you gamble a lot,’ Mr Kiyosaki said.
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‘I watched your properties go up and up and up and up and I got out of there.
‘There are too many Aussies and people all over the world, they’re flipping houses.
‘I’ve got to be ten times more cautious now because we have never been here, none of us have ever been here.
‘None of us alive have ever been here.’
Mr Kiyosaki, 74, who owns apartments in Sydney’s eastern suburbs – in Rushcutters Bay, Bondi and Randwick – didn’t give specific forecasts on the extent of property price falls in Australia.
Tim Lawless, the head of research with real estate data group CoreLogic, said the Australian property market had most likely peaked.
‘Although we can’t see any evidence that specific housing markets have peaked, it is clear that most markets have moved through a peak rate of growth,’ he said.
House and unit prices in 2021 surged by 22.1 per cent in 2021 (pictured is an auction at Hurlstone Park in Sydney’s inner west last year)
‘What I mean by that is the point at which markets achieved their biggest monthly growth rate.
‘We saw most of the capitals moved through a peak rate of growth around March last year.’
PropTrack economist Paul Ryan noted the 22.1 per cent rise in Australian property prices, in 2021, was the third fastest in historical records going back to 1880.
Only 1989, with a 29 per cent annual growth rate during an era of 17 per cent interest rates, and 1950, with an 111 per cent surge after the war, had faster property price increases.
Brisbane’s median house price last year increased by 30.4 per cent to $782,967 as Sydney’s equivalent value went up by 29.6 per cent to $1,374,970.
‘The only broad regions avoiding a slowdown in the pace of growth in housing values are Brisbane, Adelaide and regional Queensland,’ Mr Lawless said.
‘These markets are benefitting from a healthier level of affordability compared with the largest capitals along with a positive demographic trend and consistently low advertise stock levels.’
Sydney and Melbourne were expected to peak late this year.
‘Although the timing is highly uncertain and depends on a broad range of influences,’ Mr Lawless said.
Reserve Bank of Australia Governor Philip Lowe had previously promised to keep the cash rate at a record-low of 0.1 per cent until 2024 but this week said it was ‘plausible’ the cash rate would now raise the cash rate in 2022.
PropTrack economist Paul Ryan noted the 22.1 per cent rise in Australian property prices, in 2021, based on CoreLogic data, was the third fastest in historical records going back to 1880. Only 1989, with a 29 per cent annual growth rate during an era of 17 per cent interest rates, and 1950, with an 111 per cent surge after the war, had fastest property price increases
The major banks have raised their fixed mortgage rates from historically-low levels below 2 per cent.
The Australian Prudential Regulation Authority, the banking regulator, has since November required lenders to assess a borrower’s ability to cope with a three percentage point rise in mortgage rates.
Metropole Property Strategists chief executive Michael Yardney said until the 1950s, most Australian homes in capital cities were near the central business districts.
‘Before the 1950s, land on the fringes of urban cities was both close to CBDs and relatively cheap,’ he said.
‘Once land close to cities became more scarce, along with the high levels of immigration into Australia in the ’50s, ’60s, and ’70s, prices started rising at a faster rate.’
Mr Yardney said rising home prices would continue to discourage first-home buyers as rents kept on rising.
‘At the same time it will be harder for first homebuyers to save a deposit,’ he said.
‘It would also be more difficult for tenants as rents are already rising and will continue to do so, so rental affordability will be another issue and it will be important to own investment properties in locations where tenants can afford to pay higher rent.’
Source: Daily Mail
