US banker warns of housing collapse
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The man who predicted the global credit collapse of 2007 has warned that Australia’s housing bubble is ripe to burst at any time.
US investment banker Edward Chancellor has told the Australian newspaper our economy is yet to emerge from the global financial crisis.
Mr Chancellor, who works for GMO, estimates Australian house prices are more than 50 per cent above their fair value.
He says house prices would have to fall ‘quite considerably’ to revert to their average price in relation to average income.
He also warned first home buyers were among the most vulnerable, saying the ratio of their mortgage repayments to their income would rise to ‘very high levels’ as interest rates continues to rise.
A potential trigger for economic trouble and the collapse of the housing market would come if China’s demand for iron ore and liquefied natural gas slowed, he said.
Original Story taken from www.bigpond.com
