Haka>> you wonder why I say residential and commercial property...

Haka>> you wonder why I say residential and commercial property values have correlation? my thinking is this

If residential markets collapse it means values drop, but it also shows a lot less money for people. This slows down an economy which it turn drives down demand for commercial real estate.

If we look at the US market a number of large commercial real estate companies have plenty of apartments for rent on their books. But with ever devaluing home/apartment prices else where people will opt to rent cheaper places. This in turn means commercial companies have very little choice but to drop rent prices, this is currently happening in the US. In turn they are now getting to a point where the cash flow is drying up.

We had the treasurer the other day saying we don't want to get a bubble in Australia, just by him saying that indicates to me that the formation of one could have already started. If the global markets crash again, its going to put pressure on an over exposed property market in Australia.