Marcus Padley

The issue of the day is a rash of scaremongering about the Australian property market, causing the banks to have a terrible day yesterday. The CBA was down 2.8%, Westpac down 3.9%, NAB down 3.8%, ANZ down 3.5%. Here are the numbers after the falls yesterday and this morning - note that the yields on NAB and ANZ and BEN are higher than their PEs (image). The problem we have is not a housing bubble but a “Big Short wannabes” bubble, a proliferation of headline seeking film watchers who are disappointingly sensationalised by our own Australian media. The bottom line is that there are always some extremes of the property market that correct themselves naturally but to extrapolate those into a systemic collapse of the residential mortgage loans on bank balance sheets is an exaggeration. I go to an expression that one of my colleagues is famous for…”Come on, you’re smarter than that”. This is not a Hollywood movie. (VIEW LINK)


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