Uncovering the big Aussie short, in the Australian Financial Review

Uncovering the big Aussie short, by Anne Hyland in the Australian Financial Review. Read about first hand research into home finance research and Ponzi-like housing financing in Sydney.

Tepper in his report bluntly warns “Australia now has one of the biggest housing bubbles in history”, noting the country’s real estate value to GDP is 3.8 times compared with Ireland and Japan, which both were at multiples of 3.5 times before they before they experienced a housing market crash.

In Japan’s case real estate prices fell 80 per cent over the next decade and in Ireland they fell 50 per cent in the following six years. … “Australia now has the highest level of household debt to GDP in the entire world.”

Tepper … is also warning of a sharp fall in Australian bank stocks. We anticipate most bank shares will cut dividends entirely, raise capital and stock prices will likely decline 80 per cent.” He also predicted the Australia dollar could trade to 40c against the United States dollar.

Hedge fund manager John Hempton has warned of a housing correction after witnessing first hand an oversupply of houses and apartments in western Sydney and poor underwriting practices by the big banks. …

See our post on The Big Short.