world markets about to collapse, page-26

re: property about to collapse (not the markets) I'm comparing inner city, but all areas of Melbourne you can see development everywhere. People are tearing down houses in the midouter suburbs as well and rebuilding.

I think you can't really compare it to europe, since europe is also running, for example the netherlands probably has the highest property prices in the world.

The cost of a house is higher here then in the US, where you can tax deduct your interest even if you live in it.

I think the writings on the wall, when the economy faulters it will all crumble, doesn't matter what style of living people want or the changes which will occur, there will be a large downturn in the market.

In regard to your first question I'm not a property investor, I'm a share investor, so maybe there is some bias.

But people expecting property to keep going up, the only thing that makes a property price is really its rent, ie. yield which determines the price, you and see very high p:e ratios on houses at present.

Property doesn't do anything, it just sits there, and can obtain a yield via rent.

On the other hand, a business can grow. A house can't it just gets old over time. Of course wages increase and thus it becomes more expensive due to inflation. But people expecting growth in large amounts may be disapointed in the future. This was spurred on by low interest rates and people negative gearing to reduce tax, many with interest only loans.

What happens when all these property gurus with interest only loans find out a capital gain is 5-10 years away?

What happens when overgeared couples lose one of their jobs?

Anyway, I don't know your views, but I think property is something to be careful of. Just have a look at the 1980's particularly the start and the end of this decade for some important clues..