Jul 28, 2010

Housing shortage? No, it’s a debt-fuelled bubble

The property bubble denialists continue to ignore reality.

Adam Schwab — Business director and commentator

Adam Schwab

Business director and commentator

The denialists continue to ignore reality. The property bubble denialists that is. Yesterday, a leading property developer claimed that Australia had a shortage of 200,000 homes, while last week one of the most often quoted property figures alleged that Australia has no bubble, and is “undersupplied, not oversupplied”.

Dr Frank Gerber, chief economist at BIS Shrapnel, told a Real Estate Institute of Victoria conference that:

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2 thoughts on “Housing shortage? No, it’s a debt-fuelled bubble

  1. Malcolm Street

    Blah, blah, blah…

    I was one of the idiots who believed people like you in the ’90s saying property was overrated as an investment and went into mutual funds instead. Silly me… I’m now semi-retired and locked out of the housing market forever.

    I’ve been seeing articles like this for years. Yes, it looks like a bubble, but if it were a bubble it should have burst by now (as similar bubbles have recently overseas). The prices are continuing to go up year after year. If it’s a bubble, it’s an awfully long-lasting one.

    Don’t forget given the importance Australians give to home ownership even if this is a bubble and it bursts governments will move heaven and earth to stop a collapse in housing prices – it would be political suicide for any government to preside over such a collapse.

  2. EngineeringReality

    The funny things with bubbles – each time people say the same things

    “this time its different”…”get in before you miss out”…”the world has changed – its a new paradime”

    The only reason the bubble has persisted for this long is that Australia has luckily avoided a downturn.

    USA and UK didn’t avoid it – and their house prices have dropped by almost half. No one wants to talk about property in UK.

    The next time Australia has an economic downturn the prices of houses will massively fall. Its a complete certainty. And while governments will try to stop it they can’t stop market forces.

    The bond markets are predicting another downturn in the US and growth is slowing even as all the stimulus payments are running out in the US and in Europe.

    It’s a brave (or ignorant) person to buy property at the moment. You’d want to have a very secure job and focus on the long term.

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