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Monday, February 21, 2011

Australian Housing Bubble

Hard to argue with the house price to income gauge.  But not sure the crazy lack of lending standards exist.  Although income or rent is what should set the house price over the long run.

http://www.gurufocus.com/news.php?id=123123
Posted by Devon Shire at 2:19 PM
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2 comments:

  1. Ah, we frequent the same circles. Check out this presentation:

    http://www.scribd.com/doc/29520921/How-to-Profit-From-the-Coming-Aussie-Property-Crash-and-Banking-Crisis

    One recommendation is to short the Australian banks with the largest mortgage exposure. Not sure how to do that from here in the US.

    Others suggest shorting the Australian market generally, due to their enormous exposure to China. If China has a hard landing, it could knock the air out of AUS and have a domino effect on housing prices.

    ReplyDelete

  2. Also, Steve Keen often has some interesting insights. Check out this entry about declining lending standards.

    http://www.debtdeflation.com/blogs/2010/12/23/loan-standards-drop-to-keep-the-bubble-afloat/

    ReplyDelete

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