How to recognise a property bubble

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Cross-posted from The Conversation

As Australian housing prices have boomed over the last decade and a half, there has been much discussion over whether a bubble exists in the residential property market. More recently, the concern is the record-low interest rate of 2.5% may cause a housing bubble.

Conspicuously absent in the debate over the housing bubble within the mass media is a clear definition of what constitutes a bubble. This is not only the fault of the media, as a bubble is often vaguely defined within the academic literature, usually on the basis of “irrational exuberance” or “animal spirits” or chasing capital gains, rather than in terms of specific and measurable metrics.

An outside observer may find this difficult to believe, particularly given the history of regular booms and busts in the land and share markets, as recent events in the US, Ireland and Spain have shown. Mainstream economists typically claim bubbles can only be recognised in hindsight, but not identified beforehand.

Without a concrete definition, it is impossible to find something because one does not know what to look for. It is similar to telling a blind person to choose the blue pill instead of the red. Accordingly, how can a reasonable definition of a bubble be determined?

In search of a definition

One economist did provide a straightforward definition of an asset bubble: Hyman Minsky. He belonged to the post-Keynesian school of economic thought, a heterodox school with an alternative theory of how financial markets and the banking system interacts with assets, typically shares and real estate.

One of the centrepieces of Minsky’s work is the “Financial Instability Hypothesis” (FIH) which argues financial markets are intrinsically chaotic and inefficient, eventually sowing the seeds of their own destruction. According to the FIH, a bubble is defined on the basis of how an asset class is financed.

This is important, as it allows us to assess whether overvaluation exists within any particular asset class, or in this case, real estate. According to Minsky, the state of financing can be described as either hedge, speculative, or Ponzi.

With hedge financing, asset income flows are sufficient to pay down both principal and interest on the debt used to finance the asset purchase, and prices are based upon fundamental or intrinsic value. The second state is speculative finance, where income flows cover only interest repayments but not principal, requiring debt to be continually rolled over from the current time period to the next.

The terminal phase is that of Ponzi finance, as income flows cover neither principal nor interest repayments. This leaves owners completely reliant upon escalating asset values to realise substantial capital gains upon sale to meet the cost of debt and expenses. In the case of real estate, if property investors can’t profit from rental income, then realising capital gains becomes the only avenue.

As investors speculate, the debt used for asset purchases inevitably rises as both the cause and response to price increases, creating a positive feedback loop between prices and debt. Put simply, for the residential property market to meet Minsky’s definition of a bubble, three conditions must be met: increases in real (inflation-adjusted) housing prices and mortgage debt, along with persistent rental income losses.

Three conditions of a bubble

There is evidence to show all three conditions exist. From the trough in 1996 to the apparent peak in 2010, real housing prices increased nationwide by 123%, the mortgage debt to GDP ratio rose from 35% to 87% over the same period, and from 2001 onwards, aggregate rental income could not cover running expenses and interest repayments on aggregate, let alone principal.

(It’s worth pointing out that Australia’s negative gearing policy amplifies aggregate rental income losses by providing an incentive for investors to run their properties at a loss while expecting capital gains. Investors should not be profiting from capital gains but long-term rental income. While it can be argued negative gearing is an unjustified subsidy (tax expenditure), it should be banned on the basis that it amplifies financial instability through helping to create asset bubbles.)

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Minsky’s FIH has some predictive power as the data shows all three conditions were met during the late 1980s, as a small residential bubble arose on the back of a colossal commercial real estate bubble. Real housing prices increased by 39% between 1987 and the peak in 1989, before falling 8% by 1991. The mortgage debt to GDP ratio also increased during this period, and aggregate rental income was negative from 1989 to 1992.

There are eight measures of property valuation that show a substantial increase since 1996, collectively peaking in 2010. They are: nominal prices to inflation, mortgage debt to GDP ratio, rental income flows, gross yields (or P/E ratio), price to income ratio, Kavanagh-Putland Index (aggregate property sales to GDP ratio), aggregate land values to GDP ratio, and housing stock value to GDP ratio.

Bubbles don’t exist

There are two primary reasons why definitions of bubbles aren’t used in the mass media and academia. Self-interest is the obvious motivation; Australia’s residential property market has a bubble in prices, creating around $2 trillion in paper (phantom) wealth. This has made the finance, insurance and real estate (FIRE) sector fabulously wealthy, and government at all levels have benefited from rising property taxes.

Mainstream economists don’t like the idea of bubbles because the highly unrealistic theory they teach to promote policies of privatisation, deregulation and liberalisation have resulted in the largest asset bubbles in history, in direct conflict of the allegedly efficient outcomes markets supposedly create. When theory and the real world conflict in economics departments, data are dismissed because it doesn’t fit the models.

The doctrines of conventional economic theory – such as equilibrium, rational expectations and optimising behaviour – are empirically false. Economists’ models of markets are like that of an astronomer who creates an incorrect model of the solar system by excluding the sun and moons. Given the deleterious state of economy theory, it should come as little surprise the economics profession cannot identify colossal asset bubbles right in front of them.

Elite Harvard-MIT-Princeton economists in the US not only missed the obvious dot-com and housing bubbles, but put a significant amount of effort into denying these bubbles existed. On this basis, there is little hope for Australian economists, especially for those who work for government and the FIRE sector.

In the debate over the housing market, it is important for those who have vested and conflicts of interest to avoid using definitions of an asset bubble so as to create confusion regarding this matter. Further, it is difficult to claim the presently low interest rates could risk causing a housing bubble when it is readily apparent one has existed since 2001.

Article by Philip Soos, who is a research Masters candidate at the School of Management and Marketing, Faculty of Business and Law at Deakin University, and is a researcher for the Land Values Research Group, Melbourne.

Unconventional Economist
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  1. Great article. It’s a nice reminder after all the gnashing of teeth over the last few days regarding low interest rates. I’m currently renting in the east of Melbourne in a property probably worth $1.2m. My rent alone would not cover half of the interest. Take into account rates and the fees the real estate agent are making and the numbers don’t even close to add up.

    • Ahhh…. but just a tiny 1% rise in the value of your abode with a LVR of 90% will give you a 10% return on your investment. More than enough to cover the difference between rent and buy….Isn’t that how it goes?

    • Plus (much as I agree that houses are ludicrously overpriced) there needs to be some consideration of the growth in rent over time – whatever your view on that (ie some might argue there is not likely to be growth in rent, but still it needs to be considered)

      • Absolutely. I think there is no reason to expect rents not to rise broadly in line with inflation (over the very long term). Hence any real side-by-side comparison of “rent vs buy” needs to be based on the opportunity cost of expenditure; i.e., if by renting you are paying $20k p.a. less than you would if you had the mortgage, what are you doing with that $20k.

        For some people a mortgage is the best thing for them. Even if the numbers don’t add up, having the bank with their hand out for 20 years is forced savings

    • yep – i live in a house worth 1.2, 1.27 after stamp duty and purchase costs. Rent = 600 per week. That a gross yield a little over 2%. Take out REA agent fees, insurance, rates, maintenance you would be looking close to 1.6% net yield. When mortgage rates are 8% then you need over 6% growth to break even. Yes there will rental growth but you are looking at decades before that starts to look sensible. Also, dont forget an investor eventaully sells, so this cost needs to added to all the other losses.
      …. based on this, and the fact that the market in Melbourne is still 5% below peak, i reckon I saved 200to250k over the past 3 years by renting and not buying.
      … that said, i recently bought to occupy. Yield is a little bit less ridiculous now, and with rates so low the gains required to break even are more in the range of 3% per year.

      So whatever the propaganda, the best case scenario for investors is small gains once losses are accounted for. The worst case scenario ….

      • Keep in mind that most “savvy” investors often don’t seel, but use the equity from capital gains to acquire debt capital for further expansion of their portfolio.

    • thomickersMEMBER

      My mate in Balwyn is renting a $1.25 mill house for $650/week in rent. 3 bedrooms + study, and it had a renovation done 4 years ago to provide him and his wife a new kitchen & 2 bathrooms. and the rent hasn’t changed since 2010.

      • I signed a tenancy agreement on a new rental (will start next month). My rent would covers around 80% of the interest-amount. I get a brand spanking new place. It appears the the yeild is around 5.5% (before other charges) net yield might be around 2.5-3%!

  2. Phil the engineer

    Nice article, but picking 1996 as a start date directly after the early 90s recession is a bit dodgy IMHO.. Housing bears are very quick with the accusations of cherry picking data sets.

      • Phil the engineer

        1996 was the dip on the first graph, 5 or 6 years after the previous peak. Just saying the gradient would be much different if you picked 1990 or 1974, that’s all.

  3. And what quantity do I calculate to recognise a bubble?? Seems like a heuristic argument only.

  4. Easy to spot housing bubble in Australia: simply look out the window.
    Nothing will change unless rule writers grow into a sense of fairness.

  5. reusachtigeMEMBER

    What housing bubble? Been hearing this for a decade or more. Not even a hiss. We’ve got pumps!

  6. Tiliqua scincoides

    I’m sure Aussie property is overvalued, but prices will go up before they go down.

    Even if there is a bubble there is no guarantee it will “burst” suddenly, in fact I think that scenario is quite unlikley and would require an enourmous external shock of some kind.

    It’s all well and good to discus sensible economic theory but its also important to realse that most people are idiots.

  7. Soos is a legend. That constant quality real housing price index (from 1880 if you don’t mind) and the private debt figures should have the fire alarms going.

    Renting is a risk-free bargain.

    Don’t Buy Now!

  8. “Even if there is a bubble there is no guarantee it will “burst” suddenly, in fact I think that scenario is quite unlikley and would require an enourmous external shock of some kind.”

    except that enormous external shocks are the norm throughout most of history and the ‘great moderation’ from the mid-80s till the GFC is the exception, not the rule.

    In a country that is so massively leveraged to the commodity cycle an ‘enormous external shock’ seems like a given – of course the question is when, and that is what is notoriously hard to predict.

    The whole point of a bubble anyway is that it inherently unstable during the Ponzi phase, as discussed above. The magnitude of the shock required is really relative to the magnitude of the bubble. What might appear to be a relatively benign catalyst could be the tipping point if the bubble is big enough.

    • Didnt the government a few years ago bring out a housing benefit for speculators, in that if they build (I think) a hundred houses to rent out and so long as they keep the rents around 20% below market value, that they would be able to claim up to $8,000 per year for each house for 10 years. Has this $80,000 even been added to gains/yields (NRAS) all the time I have been on here and read about yields etc not one person has mentioned this scheme which would have a significant impact on buying houses.

      Also with this scheme the builder would be locked in for 10 years (it started 2008) I think, would it be fair to say that in 2019 builders/developers would be offloading their inventory and then would this be the catalyst for major price drops, but then again it could also mean the start of higher rents as the 20% discount would no longer be there.

  9. I welcome the discussion of the term bubble. Anyone can use a word if they follow the common meaning, or define their own meaning in the context they are using it.

    One of my best investments was a stock I bought on a PE of 25. It earned 4% (of purchase price) per year and paid out 2.5% per year as a dividend.
    I was not impressed by the 4% yield, however the newsletter (The Intelligent Investor) believed it was a good value stock because the earnings were likely to rise in years ahead. This is why I bought – for the potentially rising earnings.
    Indeed the earnings did rise and now it pays me a dividend of 10% per year of what I paid. Of course the capital value has also risen, but I don’t bother checking that since I don’t intend to sell.
    Now if only I could have bought far more stock back then on a 90% margin with no danger of a margin call. Then I would have made a fortune.
    Come to think of it, isn’t this what property investors in Australia have done the last few decades?- Bought a low but strongly rising dividend/rental income stream, with large borrowings and no danger of a margin call.

    Was my stock purchased in a bubble? Must it pop? Are Sydney houses in a bubble? Are current rents sustainable? Will rents continue to rise? Will interest rates stay low? Can you keep up the payments? If YES YES YES YES then property investment still makes good longterm sense at today’s prices.

    • What if you need to sell to fund you retirement?

      Capital appreciation/depreciation quickly becomes important when you count on the value of an asset to survive once liquidated.

    • Sure Claw – property investment makes sense at today’s prices.

      Except when compared to nearly anything else.

      Property is:
      – significantly overpriced based on current returns
      – subject to high holding costs and low liquidity
      – at risk of declining returns as well as declining capital values in the event of an economic downturn.

      Rents won’t continue to rise if incomes don’t (and the terms of trade shock suggests they won’t).

      If you think “it’ll never happen”, remember that vacancy rates have almost doubled in Perth year on year. Canberra rents have dropped in real terms. Median rents in Melbourne have decreased. Take care out there…

    • I actually agree with the Claw in part; however, the problem for many is that many have re-leveraged their older assets with new debt to purchase new properties; and, that this has become the norm.

      So, i don’t think that older investors represent the market sufficiently, and I would suggest that the “security” ofr the precedent is reliant on the precent itself – the continual creation and injection of larger and larger amounts of debt-money into the economy of the buyers.

      In this sense, part of the market is represented by hedge-funding, but more and more over time has become represented by speculative and, then, ponzi funding.

      This has, over time, changed the nature of the investment distribution; and I would now argue (and have for a while now) that they characterise the market.

      My 2c

    • Companies are able to reinvest past earnings to growth future earnings.
      Income growth on property is capped by tenant’s ability to pay ever-escalating rents, essentially driven by income growth (the outlook for which is not promising, as others have mentioned).
      Your insinuation that somehow the yield on property is magically going to rise to justify higher prices makes zero economic sense.

    • dumb_non_economistMEMBER


      I don’t get your argument, your stock price was increasing due to increased earnings and the dividend went from 2.5 to 10%, your RE CG was due to what? RE CGs have been rising much faster than rents, so what drives the RE CG compared to your stock? Speculation!

      • dumb_non_economist,
        Many real estate investors have also seen an epic rise in rents over the decades. Capital gain may or may not rise faster than rents in certain periods. However if the rent does rise a huge amount, then it justifies a lot of the capital gain.
        If rents are to rise a lot more, then the current house prices are also justified by those rents.
        Who is to say that it will not happen?

      • dumb_non_economistMEMBER


        Your stock CG was due to something concrete, your RE CG is due to hoped for future CG/rent gains. Besides I’ve not read anywhere that indicates that rents have risen anything likely to justify CG gains in RE.

      • Over 30 years there have been many houses that have seen the rent go from $100pw to $500pw. This alone justifies price also rising 500%.

      • dumb_non_economistMEMBER


        My maths must be dodgy, I would have thought it fair to say RE has on average doubled every 10yrs the last 30 yrs(or close to it),so over 30yrs the the price has increase 8 fold, rents haven’t.

        I don’t see how you can argue RE has increased due to rent increases as your stocks increased due to increased profits.

      • I don’t see how you can argue RE has increased due to rent increases as your stocks increased due to increased profits.

        I have never said that RE prices are due to any one factor. I point out to you that inflation in rents has underpinned prices to some extent.

        If prices go up 8 times and rent goes up 5 times then it could be thought that price should fall. But if over the next decades rent goes up another 5 times, then price might merely double once or twice, but never fall.

    • The question isn’t whether rents will continue to rise (over time they will), but by how much relative to inflation.

      The next question is then whether property values will increase at a faster or slower rate than rents.

      Of course for the latter to occur we need land prices to grow at a faster rate that the property value more generally, as land values need to carry the losses on the depreciating structure.

      At any rate. I think it would be bordering on madness to think that rents can increase faster than wages growth, and for property prices to move at a rate faster or slower than the rental growth there will be an adjustment in the yield (rent) from the investment.

      Apply this to Melbourne. On a gross rental yield of around 3.6% (so approx. 3% after fees & council rates) it becomes nothing short of price speculation to borrow to purchase such an investment. That 5% loan from the bank seems ok today, but what about 2, 3 or 10 years down the track? And that Australia taxes inflation too — so simply waiting for the rising tide of inflation to float all boats also leads to a pretty dead end.

      I’m not against property, it’s just that either rents need to sky-rocket or prices need to fall to make the numbers work

  10. Australia has the demographic profile to underpin increasing debt for another 5 years. Cannot see the bubble going beyond 2019 though.

    Nearer term the level of household debt in Australia is up there with the worst. So the bubble is already ripe for pricking. Even when interest rates get to zero the principal repayment on a 30 year loan of $300,000 is still a significant monthly hit.

    Those so-called investment properties with negative gearing relying on tax offsets for losses become a weighty burden when jobs go. Offloading the problem begins the downward spiral.

    I wonder how many SMSF are leveraged into investment properties. Pre GST I had a small portion of my super tied up in a wholesale commercial property trust. Those funds could not be liquidated and are still only being released at the rate of a drip feed. The unit price is still below the pre GFC level.

    The rising level of negative gearing into investment property guarantees the maximum bang when the bubble does burst. There is nothing more gut wrenching than holding an asset that has negative equity and little prospect of it ever being recovered.

  11. The economics profession is clueless about two things in particular, unforgivably considering how much reams of arcane theory have been written about obscure details of economies.

    One is bubbles in land values in particular. There is much more acceptance of definitions of a bubble in a share market – going by the P/E ratio.

    But the fact that they are clueless about bubbles in land values, is related to their other systemic failure; that is, to properly define “economic rent” in urban land. Mostly, economists assume that “the market merely allocates land to its best use”, and spend all their time analysing other factors in the economy.

    This is utter nonsense, especially given the obvious total change in behaviour of urban land markets, firstly, if the predominant system of mobility evolves beyond foot, horse, bicycle, and fixed rail routes, to one where people can go “from” anywhere “to” anywhere within about a 30 km radius within about 45 minutes. And secondly, whether or not there are monopoly land holdings and/or an urban growth boundary which has the same effect.

    There is obviously two completely different paradigms at work when one data set of cities has had house price median multiples of 3 for decades even as houses have grown and improved and sections sizes have grown – and the other data set has median multiples of 6 plus, even as younger generations are frantically trading off space and quality and amenities in an effort to become home owners at all. (Or in the case of developing nations, some proportion of the population is condemned to never owning a home at all).

  12. Tassie TomMEMBER

    I reckon I can pick the bursting point of the bubble.

    When more and more readers lose faith in the macroeconomics and succumb to the “this time it’s different” theory, we will be getting close.

    Judging by the blog comments, a few readers jumped onto the Ponzi train following the ABS house price numbers earlier in the week.

    When all readers say that the remaining bubble theorists are fools and MB’s audience halves, we will be getting really close.

    Then when H&H, UE, and Gerard Minack capitulate and are the final Australians to join the Ponzi fund, it will be POP time.

    • “Then when H&H, UE, and Gerard Minack capitulate and are the final Australians to join the Ponzi fund, it will be POP time.”

      I think all those guys already own houses don’t they?

      • Tassie TomMEMBER

        Well then, maybe when they use the equity in their homes as deposits for their negatively geared investment properties.

    • “Then when H&H, UE, and Gerard Minack capitulate and are the final Australians to join the Ponzi fund, it will be POP time.”

      Damn! So this friggin bubble will just keep on keeping on, is that what you are saying…?

  13. The most promising thing I heard this week was Tony Jones calling negative gearing a ‘sleeper’ issue. The tweets were going wild – calling for banning negative gearing, but neither politician uttered the word – how long can this continue?

    • for as long as calls for negative gearing to be scrapped are relegated to forums and comment sections…
      gen y must hit the streets to be heard

      • The ABC’s “vote compass” does not include the option of “housing affordability” among the dozens of issues you can pick as “your most important election issue”.

        And they wonder why younger people are not interested in the current crop of pollies…

      • I would expect that he only news outlet to pick this up would be the Guardian (Aus edition), as they aren’t (yet) in the pockets of the real estate advertising industry.

    • I caught that bit of Q&A.
      The clueless panel looked at the NG questioner like he was talking Swahili
      Is it really that hard to understand?

  14. The word ‘bubble’ gets bandied about a lot.

    Many people get hot under the collar arguing over whether something is in a bubble or not. But, just as in heated inflation-deflation debates, few take the trouble to agree on a definition first.

    I’ve always rather liked my definition. ‘A bubble is a bull market in which you don’t have a position’. There’s nothing so frustrating as seeing someone of undoubtedly inferior intelligence earn fortunes while you’re sat on the sidelines. So you declare his market a bubble.

    • There’s nothing so gratifying as seeing someone of undoubtedly inferior intelligence watch their paper fortune evaporate because they didn’t cash in before the asset bubble collapsed.

  15. I can’t recall if was Galbraith who defined it as being large increases in price of one asset/commodity when adjacent and similar assets/commodities stay on trend. Someone other than I did anyway; I’ve never had an original thought in my life.

    Therefore, if rent has only increased by CPI and housing prices have doubled, something is going on.

    As Claw eruditely states above; if you’ve got a position in it, it’s a new paradigm. If not, it’s a bubble.

    • If you call Peter Hassan, that neither changes his innate nature, nor makes him a Muslim, but most people would perceive him as a Muslim.

  16. ceteris paribus

    Call it what you like- but that first graph on constant real house prices is really remarkable, particularly for Melbourne town.

    • ceteris paribus

      In fact to this day, I recall a modest little article in a Melbourne daily towards late 1995, which encouraged prospective Melbourne buyers to get into the market before the upswing in 1996. Little did the author realize at the time that he was probably making the best call of his career.

    • What a great link.

      What I find interesting is the following:
      – There are so many different triggers for housing crashes around the world.
      – Why do governments seem to positively encourage bubbles when it’s so obviously NOT in the interest of the nation? I guess it’s a flaw in human nature. While prices are rising you get one part of the population euphorically spending (which gooses the economy) and the other part frantically striving (which keeps them out of mischief). The growth phase can last up to 20 years, which is way past the time frame of any democratically elected government, so it’s impossible for them to resist blowing the bubble. Towards the end of the bull run you become captive to the past mistakes. Consider the RBA now: Housing, which previously provided people with the illusion of ever-growing prosperity as they leveraged themselves up the wazoo (from 1995 to 2007), has sucked all the oxygen (money) out of the real Aussie economy, which is rapidly sinking to its knees as a result. If they drop rates to stimulate, housing will go up, but so will inflation because of the dropping AUD. That will result in them either raising rates to curb inflation, which will bring on a property bust, or looking through tradable inflation which will erode spending power and so also squeeze mortgage holders unless they draw down on their equity, increasing the debt load – already at eye watering levels – to finance consumption on the never-never. (My bet is that this is what will happen, by the way. It will go on and on until the truck goes off the cliff. There are no adults in a position to fix the mistakes. The population has been so thoroughly brain washed that those in charge realise that the messenger would get shot.) On the other hand, if they leave rates where they are, unemployment will go up, killing property values. If they raise rates, defaults will rise, killing property values.
      – What about them Germans? You’ve got to give them credit. Boom tish!

  17. Of course, when prices decline, as they inevitably will in any efficient market, you will claim that you were right and that it was a “bubble” all along.

    But your “bubble theory” doesn’t predict when the bubble is going to burst, so from an investing perspective it’s useless, even if it can accurately spot a bubble (I don’t see how it can, as there is no way of knowing what the fundamental value really is).

    And unless you think regulators can outsmart the markets then it’s also useless from a public policy perspective.

    • I’m not sure that’s right. I’m currently in Ireland, chatting with a number of people who got caught in the crash here. The trouble with property is that it’s really hard to offload when the SHTF. There are no bids around at anything like what you convince yourself it’s worth. Sure, if you’re a real trader you can probably get ahead of the falling market and cash out, but most people (and, I’d submit, nearly all property investors) are not real traders. Psychology gets in the way – hence the oft repeated comment that “I’ll never ever sell at a loss”: what a giveaway. So identifying a bubble is useful because it identifies the latent risk in the market and may serve as a warning not to enter. Certainly that’s what it does for me. There are plenty of other things to invest in. Why would you want to take on that level risk given the apparently quite limited return potential?

      • McPaddy yeah I’ve been Back to Ireland about 4 times since 2009 and have first hand saw and spoken to people that got trapped and became victims of that bubble…to the point of people even committing suicide.
        There is very little difference in human beings when greed and the fear of missing out as the herd mentality stampedes.
        The Irish character changed for the worse during those boom years…they became a smug arragont know all bunch but they now have their shoulders slonk lower and they are kopping the medicine being dished out. I wish they had voted No back in 2012
        The Americans don’t seem to be able to learn much as I read that there are price increases in Florida Phenoix etc but you can’t damped American greed for long, it’s a dog eat dog society over there leading from Wall Street regardless of their religious zeal.
        Now here in Australia the people are more like the Americans than the Irish even though a lot of the original Australian heritage is Irish. There is a lot of smugness in Australia particularly in regard to the RE. We haven’t got a good kick in the guts here in Australia yet and I wonder not if but when, I think it will happen but like the 2 pricks running for PM who are really shallow men I think Australia is a reflection of them…unfortunately a big facade.

  18. So instead of Labour promoting a levy on bank deposits to support a bank collapse, they could simply remove the tax advantages of negative gearing if they were serious about financial stability.

  19. If XYZ investment bank truly thought the Aussie housing market was overvalued, they’d just get $20m (loose change) buy about 40 properties in Australia, then list the fund on the ASX and let it get short sold (if that’s what others want to do). It’d be interesting to see what it would trade at vs the purchase prices.