Quote:
Originally Posted by Unregistered
The market is never fundamentally overpriced or underpriced. Property is more akin to lottery, rather than blackjack, in the sense that even if you haven't seen a number come out for a long time, the odds of it coming up is neither higher nor lower than a number which comes out frequently.
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I agree to an extent, in that it is not a fixed odds game like blackjack.
However, I disagree with the premise that the market is never fundamentally overpriced or underpriced. At the end of the day, property prices have to have some fundamental linkage to income although in the short and medium term, liquidity can muddy the analysis. If the linkages to incomes become tenuous, like the situation we have today, the market is fundamentally overpriced and is due for a correction.
This is no different from other markets like the dot-com crash (when the P/E link became tenuous) or looking back in time, the dutch tulip crash etc.
So, you cannot precisely calculate the odds like blackjack, but via fundamental analysis, you can figure out when the odds are in your favour.