Over-valuation? Not in this share market

Property and bonds are over-valued. In contrast, shares remain at reasonable levels.

Summary: Investors may be worried that Australian assets are overvalued. But considering the price/earnings ratio of different asset classes provides insight into whether or not valuations are stretched. The results are not strictly comparable as some are gross and others are net, but results do show whether an asset is overvalued or undervalued compared to its historic norm.

Key take-out: On pure price/earnings valuations, residential property and fixed interest bonds are extremely overvalued, commercial property is overvalued and shares as a whole look fairly valued.


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