The expert who predicted the global financial crisis has a dire warning for Australia's property markets.
Melbourne, Sydney, Brisbane and Perth are on the verge of the most violent property collapse since the great depression, economist guru Harry Dent has said.
Speaking exclusively with 7News, the author, economist and property guru says as an entire country, Australia is the most over-valued real estate in the developed world.
“I think it's probably going to go down at least 30 percent to kind of take off the bubble, [and] I think 50 percent down the road is even more likely,” Mr Dent said.
After London, Melbourne and Sydney are the most expensive cities in the world when housing prices are compared to earnings.
On average, Australians are shelling out more than ten times their annual income on a home.
“[Over] the next three to six years, we’re going to have a bigger GFC, we're going to have the next Great Depression,” Mr Dent said.
“I think the most dangerous years are 2014 and 2015,” he said.
The American, who begins his Secure the Future speaking tour this week, was lambasted when he predicted the collapse of the Japanese economy when most economists said it would overtake the US as the biggest economy in the world.
He also accurately predicted the timing and severity of the 2008 Global Financial Crisis.
“An everyday person with a million dollar mortgage is going to go underwater,” Mr Dent said.
A lot of people are going to have a house worth less than their mortgage, and they apparently will not be able to refinance.
Leading analyst from Residex John Edwards disagrees with Harry Dent, and says if anything, our market is getting stronger.
Dent says his predictions are based on long-terms statistics on how Australians live and spend, and data from governments worldwide.
He says the key is to look to China, where almost a quarter of all new properties are sitting empty, and that cities like Shanghai could lose 85 per cent of their value.
“All it takes is something to burst the bubble,” he said.
“If China blows it's going to have a much bigger impact than the 2008 GFC.”