There has been a lot of talk recently in the media about the Aussie property market crashing 40% over the next 10 years.
Well, I believe it has happened already. Remember Purchasing Power Parity ? The Aussie dollar has plummeted from nearly a US dollar a few months ago to around 60 odd cents now. Meanwhile Aussie property prices have been in the doldrums but roughly unchanged.
In real world terms, therefore, Aussie properties have fallen 40% in the last few months. It could fall further in November if Canberra decides to slash interest rates again.
An overseas buyer who could only afford one property a few months ago will be able to buy an additional similar property with the same amount of foreign currency, assuming it closely follows US dollar trends. We have seen this in the Sterling, Euro and the Yen recently.
No property crash for us in Oz, but that is the effect from the outside world looking in.