I would not put faith in what the IMF has to say one way or the other
4 months ago the IMF was stating that Australian real estate was over valued by at least 25% and there were only 3 countries, the UK being one in a worse position
Their opinion Australian property was overvalued was based on the strength of the economy, individuals incomes, level of borrowings
The IMF are now saying that property is only moderately over valued????
so what has change in the last 4 months
Have values already dropped 20% meaning there will only be moderate falls from here before prices bottom out??? prices have certainly dropped but not 20% across the board
Has there been a wage blow out in the last 4 months or so that has made property that was not affordable 4months ago, now affordable.
The economy is certainly not stronger now than it was 4 or 5 months ago, especially with commodity prices coming way off and the very likely hood of corporate profit warnings coming out over the next couple of months during the AGM season
and interest rates have dropped slightly but the IMF should realise that the access to credit funds is a lot tighter.
So given all this, why the change of heart from the IMF. If there is to be any credibility to the views they have expressed now or 4 months ago they need to substantiate their dramatic turn around.
