QUESTION: I am one of your biggest fans and I love your articles and have learnt so much from them. I have been reading your articles on real estate. The peak was 2007 and we have a 26 year decline into 2033. My question is: I live in Australia having moved from New Zealand in 2012. I have noticed that Australian and New Zealand real estate is still at record highs! – Even higher prices than 2007? Are you able to explain this at all and why these two markets are not operating to your 26 year decline? I would LOVE to buy a home right now but my intuition is holding me back and I trust my intuition (possible from knowledge gained from your articles). To be honest with you, I am so sick of unaffordable housing thanks to all this 30 year debt.
ANSWER: The Real Estate Cycle that peaked was in the West – not East. The financial capital of the world is shifting from USA/Europe back to Asia and Australia is closely tied to Asia rather than the West, This is why the A$ will eventually rise. Real Estate is still doing well in the “fringe” regions surrounding China. The core China economy took a hit, but not severe. China will still rebound but SE Asia and Australia in select parts have not felt the real estate crash of the West for they were not as highly leveraged by the investment banks. It does not appear that there will be a major decline in Asia before 2015.75. Expect a decline in prices there as USA/Europe meltdown. It will be at that time were we also see a real estate drop in the old Iron Curtain nations. Banks are handing out credit cards like candy there now. Keep in mind that there were no mortgages in Eastern Europe. People got to buy their homes for a few thousand and thus acquired equity. Their first peak will be 2015.75 as well.
The whole world NEVER moves all in the same directions. There always has to be two opposites, It has been that way for the last 6,000 years.