Finance guru Mark Bouris warns of housing ‘fire sale as RBA rate rises bite

Mark Bouris has predicted homeowners may be forced into a “fire sale” in the coming months, as high interest rates “start to bite in”.

Finance guru Mark Bouris has made a worrying prediction that homeowners may be forced into a “fire sale” in the coming months, as high interest rates “start to bite in”.

The Yellow Brick Road Home Loans executive chairman gave the grim warning on Wednesday, saying that although property prices will not keep rising, housing supply will – especially as people start to feel the effects of rising interest rates.

“People are hanging out to see whether or not this rhetoric which we’re hearing at the moment, ‘oh, house prices are going to go up’, before they sell,” Mr Bouris told Sky News Australia.

“If they don’t see that period, they’re going to have to sell, and they’re going to sell to a big supply market.”

Mark Bouris has delivered a grim warning of a “fire sale” in the housing market. Picture: Supplied

The prediction comes after the financial expert delivered scathing critique of the Reserve Bank’s decision earlier this month to increase interest rates for a 12th time in 14 months.

Last week, the RBA hiked the cash rate a further 25 basis points to 4.1 per cent, which Mr Bouris called the “nail in the coffin” for embattled homeowners.

He said this latest rise could be the one we “didn’t need to have” and the one that could “take the wind out of the sails of every borrower in the country” and make investing seem too difficult.

“We might start seeing desperate people selling houses at whatever prices they can get — hopefully it’s not the banks selling it for them,” he told Sky News at the time.

Housing supply may increase in the coming months, as interest rates start to bite. Picture: NCA NewsWire/Joel Carrett

This week the former Celebrity Apprentice Australia host doubled down on his criticism of the RBA and the crisis facing homeowners, and explained why he does not expect property prices to increase.

Mr Bouris said the first factor that supports rising property values is when “demand outstrips supply”

“Usually increases in demand are caused by more affordability and more affordability is caused when interest rates fall,” he said.

“The second thing that can create house price increases is if supply stays the same – in other words very low.”

But he said he expects supply to increase “because we’ve had a low supply of housing over the last six months (and) when supply increases house prices tend to go down not up”.

“The reason I think housing supply will increase is because the fixed rates will start to bite in,” he added.

There may be more houses to sell, but that does not mean prices will remain high. Picture: NCA NewsWire / Darren Leigh-Roberts

Mr Bouris confirmed he is concerned there will be a “fire sale” in the housing market once the impact of rising rates sets in.

“I’m expecting house supply to increase because the fixed sales are going to set in,” he said.

“And a lot of agents are telling me people are hanging out. They’re going to sell into a big supply crisis.”

The RBA could also choose to increase rates further, as economists at major banks have predicted. NAB predicts the official cash rate will land at 4.6 per cent by August.

But Mr Bouris said two more rate rises would spell “strife” for home loan holders, and make affordability “non-existent”.

Originally published as Finance guru Mark Bouris warns of housing ‘fire sale as RBA rate rises bite