we are just reverting to the mean !, page-16

Slappi, again you use a stat to prove a correlation to something that doesnt exist.

In relation to the ASX REIT index, this is refering to the commerical property trusts. Their fall is not related to property but to the fact that are over leveraged and anything on the ASX that is over leveraged was and has been hit for six. Financial engineering moved the tradional property trusts into becoming financial instrument which derived income from commercial property.

As to explaining the differences bewteen london and sydney there proably isnt that much of a difference in that speculators over committed and got caught out, buying several properties off the plan with the intention of selling before settlement and making big gains. however, many hadnt organised financing or never intended. as a result many reneged and had to be resold.

But slappi, this is one aspect of the market that many seem to want to use to justify across the board falls which is something the professor and his followers tried to push, again citing the US as the basis.

In relation to the US, the ir loans are non-recourse which means that when a householder wants to pay any more they just send in the keys to the bank. this situation has then created the avalanche in the price falls. combined with the fact that financing costs were much higher than renting caused people in droves to abandon houses.

Australia does not have such arrangements, any negative equity stays with you as personal debt if you sell out. accordingly there is less incentive to move out. combined with the tight rental market and interest rates at very low levels and expected to fall, paying off the mortgage is cheaper than renting.

I have to agree that the prices rises of the last 10 or so years will not be repeated any time soon, one can still make money in such an environment. just means you have to be a lot smarter.