Explain what would happen if the speculation made by Reddy became widespread. Would expectations become self-fulfilling?
Rahul Reddy has been investing in Australian real estate for the last two years. Now, with the Australian dollar growing in strength and the American housing market strained, he’s got his eye on real estate in Florida and California. Encouraged by a weak dollar and a belief in the resiliency of the U.S. economy, investors are seeking investment properties and development opportunities in the United States. “The United States is good for speculative higher-risk investments from our perspective because the strong Australian dollar will enable us to gain hold of real estate at prices we will probably not see for a long time,” says Reddy. “The United States is an economic powerhouse that I think will recover, and if the exchange rate goes back to what it was a few years ago, we will benefit.”