What happens when the risk free rate and expected return on property converge? That's happening currently.
At the moment, property is attractive because of the leverage and higher expected return. What happens when banks reprice risk and tighten lending? There will be less leverage, fewer bids and as a consequence more investors trying to get out. There will also be a safer place for them to go that will return well above inflation.
The property bulls speak of property as if it's safer than Govt. bonds or AAA/AA corporate credit. It's really not. And if anyone wants to have a look at what a bidless market looks like in a traditionally very stable, more liquid and much safer asset class, look at the bund recently.
It is impossibly difficult to appraise risk for real estate if there is a downturn (unlike government bonds / some corporate issues).
