Australia’s only MSM voice of reason on the bubble (yes, peeps) Chris Joye today slams the RBA for its runaway housing bubble that has re-ignited after an Autumn slumber:
…The RBA says we should not get exercised about stonking house price appreciation because Australia’s housing credit growth rate is modest.
In his July speech Stevens said “the growth of credit outstanding for housing is about 6 to 7 per cent per annum, or slightly above trend nominal income growth”. “It’s hard to mount the soap box to complain about that pace,” he averred. Really?
Credit growth is only useful in the context of what it tells us about the “level” of leverage. If we had low leverage and fast credit growth, we’d be keeping an eye on how leverage was rising over time towards dangerous levels.
…In contrast to the US and UK, Australian households hardly deleveraged during the GFC. The current household debt-to-income ratio of 150 per cent will soon exceed the 152 per cent level hit in June 2007.
Likewise the ratio of house prices relative to incomes is about to breach the records attained in 2007 and 2010, if it has not done so already.
Correct. Compared with Glenn Steven’s waffle in parliament this morning, Chris Joye is a bastion of sanity.
