It was the property market which caused the first GFC and I suppose the question is, can lightning strike twice? I’m certainly not an expert on global property markets but what I can say for sure is that people (especially in the financial markets) seem to have very short memories indeed and have reverted to exactly the same type of behaviour as around the time of the crisis.
Now we are hearing continued reports of property markets in the US, UK, HK and Dubai which are struggling to stabilise and for me the obvious question is what sort of exposure do the world’s banks still have to a possibly over-priced property market. Can the same thing happen all over again? My gut feel is to say no, but it’s certainly unnerving to think about.
If property markets start crashing again, what will happen in the FX market? Bags not being long AUD!
