Bentleigh East, I am just going to fix up your housing analogy...

Bentleigh East, I am just going to fix up your housing analogy so that it is actually representative of the current CER situation.

You have an investment property in Bentleigh East and it is valued at $1m. It remains very difficult to sell your house for $1m, but you have a piece of paper with that figure on it.

You also have a mortgage on the property of $700k leaving you with equity of $300k. There is a market where you can trade your house and mortgage as a package and it is selling at about half NTA being $150k for the equity or $850k for the lot (Not quite as an extreme discount as your $400k, but much more accurate)

You have two tenants in your property one aussie and one american. The aussie pays his rent on time, but US tenants can be a bit of a worry at times and there is a much higher chance that he might leave or ask for rental relief which can have a detrimental effect on your properties value.

Now here is the big one. You are aware that your local council has been in discussion with a consortium of investment banks regarding a potential transaction for your property. The council feel that your mortgage is too high and the council is likely to force you to give up some of your property in exchange for the repayment of some of your debt. These investment banks are greedy little buggers and always make sure that they take plenty for themselves and dilute your interest. Have a look at every other capital raising in the REIT sector, there is always dilution and the higher the gearing the more of your house they take.

When you take the above into account you can see why people are trading your $1m home on the market for $850k and it actually seems quite reasonable.