Is there a housing bubble?

Posted: September 9, 2010 | Author: | Filed under: Housing | Tags: , , , | 9 Comments

Rismark International

In an excellent post, finance whiz Christopher Joye explains that all those foreign hedge funds who are actively shorting Australian bank shares are themselves taking a bath.

He deflates the claim of “US investment legend” Jeremy Grantham that Australia’s housing market is a time bomb with house prices 7.5 times family incomes. The hedge funds believe the housing bubble will burst and threaten the balance sheets of Australian banks.

Mr Joye, who is the MD of Rismark International, points out that the home price to disposable income ratio in Australia was actually only 4.6 in the June quarter 2010, a figure generally in line with the average since 2003. Read the rest of this entry »