by Wolf Richter
Best way to short Australian real estate, or “widow maker trade?”
It has been called the “widow maker trade,” based on how short sellers have been dealt with over the past few years.
The fundamentals have been inviting: Australia has been in a fully blooming housing bubble. Households are the most indebted in the world, based on debt to disposable income. To maintain the housing bubble, the central bank slashed interest rates to record lows (1.75%). The government wants to keep the bubble going for as long as possible. So regulators close their eyes, according to media reports, to questionable or even illegal lending practices. Home prices, after soaring for years, are clearly unsustainable.