Australian investors are yet to accept strong probability that returns will be lower in the coming decade than in the previous one. One of the cause of this optimism is high rates of term deposit that are around 6-8%. This creates an equity return of 12-15%. Macquarie private manager Jeffrey Wrightson says "Local investors sailed through the global financial crisis in fairly good shape, but Austalia is not immune to the ills of the world economy."
One of trigger that may shake local market would be a fall in the property market. Banks argued " the symptoms of an unsustainable bubble in the property market is real; from excessive household debt and low levels of affordability (based on high house-price-to-income ratios)". As a result, estimates of Australian house prices being 20-50% overvalued have become commonplace during past decade. However, Macquarie expects price correction will not occur in the near future due to rapid population growth, strong labour market condition and favourable lending composition.
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