When the facts change, I change my mind. What do you do, sir?

It's fascinating to observe the slow but steady deterioration in sentiment amongst Australian property bulls in recent weeks, as the evidence mounts that we are headed for serious trouble.

However, not all the property bulls are finding it easy to let go. Which brings me to this highly amusing article in Domain's "Investor Centre" blog titled "Bubble Trouble - How Certain Are You?". In a truly rambling 1,100 word missive, "property journalist" Chris Vedelago says that he's "not convinced" that we are in a property bubble, or that the bubble is bursting.

In a stunning display of logical jujistu, the author argues:

• Most of those predicting trouble today are the same people who predicted the property market would crash during the GFC. 
• The property market didn't crash during the GFC. 
• Therefore we should take a close look at the "motives" of anybody who thinks we are in the midst of a property market bubble today. 
• Oh, I'm open to being convinced I'm wrong but don't tell me what a hedge fund operator has to say.

I'm not even sure where to start with this one. I don't think I need to repeat that the Australian housing market only survived the GFC thanks to massive government intervention. It's truly difficult to contend with this sort of contorted logic. Vedelago's argument is like saying that if a Qantas A380 with an exploding engine manages to land safely, the plane must be airworthy, so no further investigations are necessary.  Anybody who predicted that the plane might crash has suspect motives and should not be listened to.

I also find it highly amusing and ironic that Mr Vedelago impugns the motives of property bears, who truly have nothing to gain from a crash, while ignoring the massive vested interests of the spruikers who continue to insist that we are not in a bubble.

And finally, the author's silly swipe at hedge funds is totally misplaced. Contrary to popular belief, hedge funds are actually in the business of making money. If you read Michael Lewis's excellent account of the US subprime crisis, The Big Short, you will see that it was hedge funds, not real estate agents or "property journalists", who were among the few to correctly forecast the US housing collapse.


After another weekend of dismal auction results around Australia, the probability is growing that we are entering a prolonged slowdown in the property market, if not a crash. To paraphrase John Maynard Keynes, I would like to say to Mr Veledago, "When the facts change, I change my mind. What do you do, sir?"