Gotti proffers property bubble pins

Old man Gotti has assembled his list of property bubble pins at Dad’s Army:

1. halt to the rising population
2. halt to the selling to Chinese investors
3. limiting negative gearing to new dwellings
4. councils or state governments making gaining approvals much easier
5. credit crunch
6. severe recession
7. higher interest rates
8. changes in the pension rules, which currently encourage pensioners to hang onto their dwellings rather than down size
9. superannuation funds are stopped from buying investment dwellings

Not a bad tactical list but fails to describe the real risk (let’s face it, this is really just a list of policy supports).

We all know that the politico-housing complex will support prices as long as it is able. The major risk, therefore, is that it is unable to do so.

And that is where we are heading as:

• monetary policy runs out of ammunition prior to the next global shock as the mining bust continues;
• fiscal policy enters a series of politically calamitous sovereign downgrades limiting stimulus options;
• the next global shock hits largely unprotected and highly indebted households hard, and
• the subsequent rise in unemployment kills off population growth.

There’s your pin.