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Exclusive Interview with The Kouk, Winner of ‘The Great Housing Debate’

Updated: Dec 1, 2023

It’s not every day that I find myself aligning with the views of Stephen ‘The Kouk’ Koukoulas.

He is a bit of a legend in the Australian economics scene, having worked for the Commonwealth Bank, TD Securities, and Citibank, among other big-name institutions.

He also worked as an economic advisor to former Prime Minister Julia Gillard.

Late last year, he took part in ‘The Great Housing Debate’ with Coolabah Capital’s Chris Joye.

During the debate, The Kouk forecast that Australian dwelling values would only decline 7% peak-to-trough on the back of a lift in Australia’s official cash rate to 3%:

Peak to trough is minus 7%…That assumes 300 basis points of rate hikes from the RBA…So a 7% decline…My 7% fall is basically linked to Sydney and Melbourne doing a little worse than the average…So minus 7%. It will probably occur in the middle parts of 2023 to the latter part of 2023.

Joye, on the other hand, laid out one of the most extreme bear cases for the property market that was published in 2022…

We believe that after the first 100 basis points of RBA rate hikes…we forecast that house prices nationally would fall 15% to 25%. And I guess in contrast to Kouky, in our analysis and all of our research, by far the dominant influence on house prices is mortgage rates and purchasing power.

Shortly following the debate, the property bears on Twitter hailed Joye as the winner.

Fat Tail Investment Research

Source: Twitter

Kouk’s response may have been a little extreme, but I would have sided with his bet at the time.

This is where things sit currently (to the end of February 2023):

Fat Tail Investment Research

Source: CoreLogic

The official cash rate is now 3.6%. Nationally, values are down 7.9% — with the most extreme falls felt in Sydney, where the median has fallen just more than 13.4%.

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