Ever since Gottleibsen wrote an article saying that "18 months after each share market crash there has been a propety crash" I have seen it repeated by many others (even that pretty-boy tool they bring in on Lateline Business every now and then).
The problem is that Gottleibsen was completely wrong.
In 1987 we had a huge share market crash. 1988-190 saw huge property price rises.
In 1999 we had a dot com crash, from 2000-2003 we had huge property price rises.
Note that it is roughly 10 year cycles.
In 2008 we have had a huge share market crash. I am confident that 2009-2012 will see very strong property price rises.
Many of my earlier posts elaborate on why we see property price rises after share market crashes but I will simplify it here.
Investors invest. That's what they do. There are only three asset classes to invest in.
After a share market crash it takes a few years before the masses trust the market again.
After a share market crash investors flee to cash investment. After a while (6-12 months) they get tired of getting nowhere with cash investment and turn to property.
It just a big cycle that goes around and around.
This time will be incredible. Rates will be incredibly low, rents will be terribly high and building of new buildings is tragically low.
When it starts the bears will once again be crying that it isn't fair, it can't be happening, it shouldn't be happening.
