Look Out Below, Down Under

As this article points out, the Australian housing market is starting to get pummeled. Even though Australia is thousands of miles from the Jersey Shore, it could be a harbinger of things to come for our area.

“The property market slump is starting to bite and it looks as though the rough ride could last a while.

Sydney is enduring its worst real-estate climate for 15 years and Melbourne, while a little better, isn't far behind. A 22 per cent fall in established home sales, hefty falls in building approvals and disappointing sale prices paint a really ugly picture.

The question is, where are we in the cycle: the depths of the downturn, the finish or just the start?

All investment markets ride a boom/bust cycle but in property a bust can be followed by a long period of stagnation. Think about this:

* The Economist magazine's property index shows that Australian house prices are overvalued by 50 per cent; that the last property boom was bigger than the dotcom bonanza of the late 1990s; and that the global housing market of developed countries has been on the same roller-coaster.”

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