Dire Prediction For Australia
The Fairfax site reports JP Morgan sees much lower home prices in Australia. "Analysis by JPMorgan concluded that nationwide house prices would fall 10 per cent because the stock of new housing had grown unsustainably, while returns from rentals were about half those commanded by shares investors."
"Stephen Walters, the investment bank's chief economist, noted housing accounted for a record 56 per cent of all investment spending last year, up from 40 per cent five years earlier. The deflating housing bubble would create 'a significant headwind for Australian consumers this year', he said."
"Mr Walters blamed state and federal policies for stoking the bubble, including stamp duty concessions, first home owners grants, negative gearing and the 1999 capital gains tax discounts."