At Domainfax there is an interesting housing bubble piece today:
Intense media focus on housing affordability has primarily focused on the story of the individual; the young person who can’t afford a house. But in all of our focus on the individual, we are failing to recognise the greater problem – that when house prices do fall, and they will, they risk taking our banking system and the wider economy with them. We need to induce a “soft decline” before it is too late.
The myth that house prices must continue to rise, and that housing is somehow different to any other asset class, is a dangerous one. Like any other asset class, housing is subject to changes in demand, speculation, and increases and decreases in price. This is obvious when one looks to the house price reductions in the US and Europe during the global financial crisis, and house price declines in Australia in the early and late 1980.
