Following my last post regarding Australian property market being over-valued by many metrics such as price to rent ratio, price to disposable income ratio etc.
For those who thinks that property price does not decline because the land cannot be created hence making it scarce resource. Here is the hard evidence for a second thought.
Japan's land prices at new low. The land price is currently at 1/3 of what they were in 1991 after Japan's bubble economy peaked. No one can argue the scarcity of land in Japan, one of the most densely population place on earth.
Yet land price fell long and hard. More importantly it is still falling.
Think twice when many experts put their cases forward regarding the fundamentals of the Australian property market. Think what happen to Japan.
Japan is a prime example of what happens after accumulation of mountains of debt. At some point, the economy will snap. The harder the market streams ahead itself. The hard and longer it falls from the top.
Nothing goes up forever vice versa. Each individual have different level of risk tolerance.
However, one thing is common everyone hates to lose money. So don't get yourself into that position.
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