Interesting subject...I find people have emotioanl attachments...

Interesting subject...I find people have emotioanl attachments to all investments.
If you own bhp or cba or xyz and someone comes out and talks it down its natural for most to defend the stock. Not only are they worried about someone talking it down but it can be seen as them may know something you dont so I guess people kind of defend their choices.
Anyway the oecd stated over 12 months ago Australias house prices were if not the most expensive on a whole then close to it compared to any other country, this being based loosely on the buyers earnings and the rental returns.
If my memory serves me correctly they stated Aussie homes were close to 50% overvalued meaning a house selling for 300k should sell for 200k.
the 200k figure was to bring it back to fair value, things can fall below fair value.

I am a technical trader so fundamentals aren't really my game, but I think in propertys case its rather simple.
Is there a shortage of the commodity eg land in Australia, quite simply no way. This is the argument the Japs used for their property prices in the 80's before house prices dropped 50% and are still cheaper.
Are the returns good eg yield, 3-4% is close to half what they usually are, similar to buy the xao when it has a p/e of 34 instead of the historical 17.
Are you buying your property at the top of a boom? We havent had a recession for well over a decade, unemployment and interest rates are near record lows.
So the risks are firmly to the downside, with potential upside gains very limited.

The state governments are all now in the process of looking at massived land releases.
the federal govt and ato has been spending a lot of time also in the last 18 months re-assessing negative gearing.

I guess the biggest problem i see with property now is everybody thinks its a sure thing, this is exactly the type of thinking that causes manias.

I think a lot of Australians need to seriously take a step back and see what they are really paying 400k for(the average house price).
Are they only paying 400k cause they think it will be worth 450k next year, eg the greater fool theory where you beleive you can sell it to a greater fool than yourself at a higher price.
If thats the way you think, then you would be happy and maybe a lot of others are now to buy that 400k house tomorrow for 800k.
So are you buying that house as its yield is good or for capital growth?
And do you really have a fair idea of value or will you pay anything cause the price is rising.
The last boom was dot com, people paid any price for stocks with low or no yield under the assumption it was a new paradigm and they would be able to make capital gains, we are on the edge of this happening in mining stocks, is property the same, have the rules changed and are we once again in a new paradigm?

I've sold my properties but still invest in property shares as the liquidity is there, good luck to those who hold but i think the party may be over.