The boss of one of Australia’s biggest property investment groups has warned the nation risks sliding into recession, with rising unemployment and stubborn inflation threatening to deliver a painful economic downturn.
Charter Hall managing director David Harrison said Australians faced a difficult 12 months , warning the Reserve Bank could be forced to keep interest rates elevated even as households and businesses struggled.
Charter Hall Group chief executive David Harrison.
Speaking at the Property Council of Australia’s Property Congress in Brisbane on Wednesday, Mr Harrison said the possibility of a recession was becoming a serious concern.
He blamed years of excessive government spending and mounting debt for leaving the economy increasingly vulnerable.
While the pandemic had justified extraordinary government intervention, he argued spending had continued long after the immediate crisis passed.
Mr Harrison warned the consequences were being felt by ordinary Australians, particularly mortgage holders and renters whose disposable incomes were being squeezed.
People walk past the Reserve Bank of Australia (RBA) in Sydney. Photo: Torsten Blackwood.
He said the Reserve Bank faced an increasingly difficult balancing act between controlling inflation and preventing unemployment from rising sharply.
The danger was a so-called “hard landing”, where interest rates remained too high for too long, tipping the economy into recession.
Mr Harrison suggested unemployment could climb above five per cent, potentially forcing the central bank to cut interest rates.
But the economic damage could already have been done.
The property sector would not be immune, with businesses facing growing pressure as tenants struggled to meet rental obligations.
Some experts say Australia is headed for recession.
Despite the gloomy outlook, fellow panellist and QIC Real Estate managing director Deborah Coakley said opportunities remained for investors, particularly in retail property.
She said the fundamentals of property investment remained critical, including the financial strength of tenants and their capacity to pay rising rents.
QIC was seeing growing opportunities in retail assets, supported by population growth and demand for shopping centres that increasingly served as community hubs.
Ms Coakley said greater certainty around government policy, taxation and interest rates would help restore investor confidence.
“Time kills deals,” she said, highlighting the importance of stability for long-term investment decisions.
Despite challenging times, there are signs the Melbourne property market is making a recovery. Picture: Jake Nowakowski.
Development Victoria chief executive Anne Jolic also pointed to opportunities for recovery, particularly through partnerships between government and private developers to unlock housing supply.
She said infrastructure investment and collaboration could help stimulate development even in difficult market conditions.
Mr Harrison remained optimistic about Australia’s longer-term investment prospects, saying international capital was increasingly attracted to the nation’s population growth and relative stability.
He said Japanese investors were showing growing interest in Brisbane, while Melbourne could eventually benefit from investors seeking value in a depressed market.
