Who is Robert Shiller? Well he once famously predicted the stock market crash of 2000. He's a Professor of Economics Yale University and has drawn parallels between the irrational exuberance of the stock market in the late 1990s and the boom in international property prices in recent years.“The high valuation that the stock market attained at its peak in 2000, and the relatively high valuations that it still shows today, came about for no good reason,” he writes. “The high valuations that the prices of homes attain in many markets are coming about for no better reason.”
Shiller has produced an index of US home prices from 1890 to 2004. His amazing finding is that real home prices were only 66 per cent higher in 2004 compared with 1890.Thatworks out at a singularly unimpressive return of 0.4 per cent per year.
Shiller finds that pretty much all of the increase occurred in two periods: immediately after World War II and from 1998 onwards, immediately after the stock market boom. Click here for more
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