"Residential housing AT LEAST 20% overpriced
It won’t make us popular but that’s what we think. And we’ve got the facts and figures to prove it.
They’ve been happening all over the world but Australia’s property boom has been one of the juiciest. We now have one of the highest ratios of property prices to income in the OECD, and a population that thinks ‘property can’t fall’. That’s a recipe for disaster.
So what, you ask? What’s that got to do with picking stocks?
Well, at $3.5 trillion, households’ investment in residential property is seven times larger than the wealth tied up in the stockmarket. A lot of plasma TVs and fuel guzzling Ford Territories have been bought on the back of a booming property market and easy credit. For the banks, property developers and anyone earning their bread from the Australian consumer, a 20% fall in the property market would be a disaster.
We’ve been burning the midnight oil gathering facts, putting our case together and analysing the consequences. It’s time for us to get some sleep, but it’s time for you to…" (HAPPY FOR YOU TO FINISH THAT SENTENCE YOURSELF). QUOTE WAS FROM AN EMAIL I RECEIVED FROM THE "INTELLIGENT INVESTOR NEWSLETTER"
"Residential housing AT LEAST 20% overpriced"
If this is true (and I'm not argueing that it's not) and property averages a 10% growth each year, then all that needs to happen is for property to remain at the same price for two years in order to let the rest of the market to catch up. Why must property fall in value?
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