Everyone has an opinion on the Australian property market — locals and international observers.
Locals tend to be more defensive — ‘Our market is different.’ Whereas those from distant shores look across the Pacific and see a massive bubble in search of a pin.
Comments include ‘It’s overvalued’, ‘Young people will never be able to afford a home’, ‘There’s more growth left in the market’ and ‘The market may flatten out but it won’t bust’.
Before delving into the potential outlook for the great Australian dream, overnight the US share market posted a 118-point gain and stayed above the 20,000-point level.
Gold was down for the count in mid-December 2016. Pundits were predicting further downside…extrapolating the trend into the future. As usual, when all the pundits are on one side of the trade, the opposite tends to happen.
On 3 December, 2016, I wrote in The Daily Reckoning:
‘The latest “expert” commentary [on the gold price] tells us that “the worst is yet to come”…“The top two gold forecasters who say bullion will suffer further losses in 2017.”
‘… What’s been highlighted here is a classic case of extrapolation…by both the investing public and so-called expert analysts.
‘What has happened will continue to happen.
‘Investors panic AFTER the asset has fallen in value.
‘… The herd rushes in, the industry forecasts prices to go higher, the herd rushes out, and the industry forecasts prices to go lower. We press the “rinse and repeat button” again, and again, and again.
‘Here’s my guess: Based on nothing more than being an observer of investor psychology, the gold price will rebound in the coming months.
‘While I think gold should enjoy a rally from an oversold position, my longer-term view is that gold, in due course, will suffer a far bigger selloff than the one we’ve seen recently.
‘Investors really do not know the value of an asset; all they know is the price.
‘There’s a huge difference.
‘At present, asset prices in markets are being inflated by the twin propulsion of low interest rates and easy access to credit. When, not if, both of these factors are put in reverse, we’ll see true value emerge.’
Future Pacific - Real Estate Brand Enterprise
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