I mentioned in this previous post "Bubbles, bubbles everywhere the other day about the almost crazy, wild rush we witnessed in a few auctions. Remember the little timber cottage with only 404m2 land with a long queue outside I mentioned? I went to the auction last Saturday and guess how much it was sold for...
I can give you the sold price of 2 other properties as reference:
*A 2 bedroom brick veneer with 316m2 land sold for $726K on 27th March in Auction (mentioned in the same post)
*A 3 bedroom timber cottage with slightly bigger land of 416m2 sold for $760K on 16th April.
The answer is as below:
Yes, this is really crazy.
There's this article from The Australians today talking about Edward Chancellor, of US investment management firm GMO who predicted the GFC, saying:
"estimates Australian house prices are more than 50 per cent above their fair value -- a once in 40-year event. " If house prices were to revert to their historic long-term average (ratio of average price to average income) they would fall quite considerably,"
He said prices would have to fall by more than a third to reach fair value -- although some of this fall would be cushioned by income growth."
There's also reports about RBA might announce another rate increase tomorrow afternoon due to the soaring house prices. Let's wait and see how everything goes... But for sure, I can hear the bubble cracking...