Property punt needs ‘supreme act of faith’ says Neilson

At the beginning of the 1990s, this ratio was only about three times household incomes… this looks like the peak,” Mr Neilson said. “To believe that home prices in the next 10 years will meaningfully outpace the consumer price index (CPI), as they have in the past, would require a remarkable set of circumstances,” he said - low interest rates, people’s willingness to borrow more, greater work force participation, and wage growth that exceeds inflation.

Moody’s Analytics has warned of “worrying trends” when interest rates rise, because rents and incomes have failed to keep pace with surging property prices and under normal interest rates, national house prices appear overvalued.

Read more here: SMH


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