Although it has been widely claimed that our banks are some of the strongest in the world since the GFC, I've been concerned about their high level of lending for housing, and the serious over-pricing of housing in comparison with earnings.
Although statistics vary, depending on whose statistics you look at, it appears that over a period of forty years, the average house price has gone from about 3 x average earnings to almost 10 x average earnings. I think that in the USA housing bubble, the average house price was about 6.5 x average earnings before the crash.
If our housing bubble really bursts and the banks suffer severe losses on their mortgage books, the Aussie dollar is likely to go into an uncontrolled slide.
The upside of that is that gold in $A will rise substantially. Then the junior gold miners will really shine.
Mike
FML Price at posting:
7.1¢ Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)