Jeremy Grantham, co-founder of GMO, a global investment management company warned that the housing markets of Australia and Britain are the last two bubbles after financial crisis. Both the markets are expected to witness a crash within a limited time period.
As reported by The Australian, Jeremy Grantham yesterday said that Australia had an instantly recognizable housing bubble. Therefore, prices were required to decrease by 42% to return to the ongoing trend.
“You cannot possibly miss it,” he said.
“The price of housing typically trades about 3.5 times of family income and in bubble it goes to 6 or . . . 7.5 (times).
“Australia is having one now. You are at near 7.5 times family income . . . which suggests you are twice the size that you should be.”
Mr Graham also asserted one of the significant factors that are expected to cause a correction, saying “Sooner or later, the rates will go up and the game is over.”
However, this statement contradicts the RBA. Ric Battellino, the deputy governor of RBA told today that the housing prices in Australia were reasonable when compared to income.
Mark Forytarz and Paul Castran, the two eminent personalities from Castran Gilbert have years of experience in the real estate industry. Both of them have presided together over several real estate sales. They regularly share their views about the latest happenings in the real estate market.