Today at Business Spectator, noob Callam Pickering does another creditable job on housing:
It is clear that low interest rates have gained some traction in the Australian housing market. However, this has resulted in two undesirable developments. First, first home buyers are effectively priced out of the market in most states; and second, speculation and investor activity has become a major driver of price developments.
Under these circumstances, price growth is unsustainable. Eventually the market will run out of owner-occupiers looking to upgrade or downgrade, which will leave investors simply speculating among themselves. The reality is that first home buyers are an integral part of sustainable house price growth. As long as they remain on the sidelines, I will remain pessimistic about the outlook for prices.
Very rational Mr Pickering. Just remember that the market can stay irrational for longer than you stay solvent. Pickering has previously pooh poohed the notion that Australian housing is a bubble. Yet what is he describing here?
Moreover, Pickering is from the RBA where it is myth, possibly even legend, that Ian Macfarlane popped a housing investor bubble in 2003. Well, the same is back bigger and better today:
So what do we call it?
