CBA: Aussie house prices to keep falling

By Gareth Aird, senior economist at CBA:

Key Points:

  • Australian residential property prices have fallen over the past twelve months.
  • The near term indicators suggest that prices will continue to deflate.
  • We believe that the best indicators to watch for assessing the very near term outlook for property prices are: housing finance; auction clearance rates, foreign residential demand; and the house price expectations index from the WBC/MI Consumer Sentiment survey.


Dwelling prices are influenced by a range or factors. Prices go through both longrun super cycles as well as shorter-term cyclical ones. Over the medium to long run, prices are influenced by the economic cycle, the credit cycle (which is driven in part by monetary policy), tax policy, population growth, labour market participation, land release and dwelling construction. All of these factors are important for assessing the outlook for property prices over a multi-year horizon. But when considering the very near term outlook for prices it is more beneficial to focus on indicators that capture momentum.

We have identified four leading indicators of dwelling prices that we believe capture the momentum in the property market well. They are: (i) the flow of credit (i.e. housing finance); (ii) auction clearance rates; (iii) foreign residential demand; and (iv) the house price expectations index from the WBC/MI Consumer Sentiment survey. Some of these indicators are the symptom rather than the cause. And the lead times vary. But we consider each one of these indicators worth monitoring as they have a close relationship with near term changes in dwelling prices. From our perspective, we have found these indicators to be particularly useful for identifying turning points in short run housing price cycles. Presently all of these indicators are pointing to dwelling prices continuing to deflate over the near term (up to six months). This note discusses each factor.

(i) The flow of credit

The flow of housing credit is published monthly by the ABS in the housing finance publication. It measures the secured finance commitments for the purchase of owner occupied dwellings and finance commitments for the purchase of dwellings for rent or resale (investment housing). Put simply, it is the amount of money lent domestically each month to the buyers of Australian residential property. It differs from the stock of housing credit, published by the RBA, which is the total amount of credit outstanding to the household sector that was lent for the purposes of purchasing property.

From a dwelling price perspective, the flow of credit matters more than changes in the stock. As chart 2 shows, the annual change in housing finance has a close leading relationship with the annual change in dwelling prices by around six months.

New lending is driven by the supply and demand for credit. The latest housing finance data indicates that the flow of housing credit continues to fall. And the pace of the decline has accelerated (chart 3). Credit to investors has been trending down for the past 1½ years. But it’s the shift downwards in lending to owner-occupiers that is behind the recent acceleration in the decline of credit.

Why so? Lending standards have been tightened. But we believe that the demand for credit is having a bigger impact on new lending than the tightening in the supply of credit. We have that view for two reasons. First, it is not just the value of loans that is falling but also the number. As at September 2018, the total number of loans to owner-occupiers (ex. refinancing) was down by 11.1% over the year. Falls have been posted in most states (chart 4). A more rigorous assessment of living expenses should weigh on the value of lending. But it should not in and of itself have a material impact on the number of loans written. Second, credit to owner-occupiers has fallen sharply over the past few months. While there may have been some further tightening in lending standards by some financial institutions in the past two months, they would not have been sufficient enough to cause such a dramatic decline in lending over that period.

On their own, tighter lending standards should result in a “one-off” style levels adjustment to the flow of credit and a new paradigm should be set. That obviously takes a little bit of time given individual lenders have tightened at slightly different times. But as APRA Chairman Wayne Byres said in July, “the heavy lifting on lending standards has largely been done.” Therefore we conclude that tighter lending standards are not the primary driver of the acceleration in the downward trend of housing finance. Rather it is indicative of falling demand for credit because momentum and household expectations of property price appreciation have declined (see below).

(ii) Auction clearance rates

There’s a pretty sound relationship between auction clearance rates and annual changes in property prices. Generally auction clearance rates are a leading indicator of prices. As chart 5 shows, auction clearance rates tend to lead prices on average by two months. Auctions are more popular in Sydney and Melbourne as a means of selling a property. As such, the link between auction clearance rates and property prices is very much a Sydney and Melbourne story. As a rough rule of thumb, the annual change in dwelling prices tends to be negative when the auction clearance rate is below 55%.

Australia’s auction clearance rate has been on a downward trend since the beginning of the year. More recently the clearance rate has dipped to 40-45%. This is indicative of a housing market that has weakened and one where there is a mismatch between the expectations of buyers and sellers. As such, prices are adjusting downwards. The latest auction clearance rates imply that dwelling prices in Sydney and Melbourne will weaken further over the very near term.

(iii) Foreign residential demand

Unsurprisingly, there is a relationship in Australia between the demand for property from foreign investors and dwelling prices. From early 2012, demand for Australian property, particularly in Sydney and Melbourne, was augmented by foreign buyers. But over the past two years, foreign investment in Australian property has waned. This is primarily due to a lift in state government stamp duties levied to foreign investors as well as tighter capital controls out of China.

The NAB Quarterly Australian Residential Property Survey captures housing sales to foreign investors as a share of total sales. As chart 6 shows, there is a decent relationship between the annual change in property prices against the share of sales going to foreign investors. Generally foreign purchases have led prices on average by around four months, although that lead time has shrunk more recently.

The decline in foreign investor demand is consistent with a further easing in dwelling prices over the near term. At present, there is no evidence to suggest a rebound in foreign investor demand unless there is a policy change – such as a reduction in stamp duties levied to foreign investors.

(iv) House price expectations

The monthly WBC/MI Consumer Sentiment survey contains an index that captures the consumer response when asked about their expectation of house prices in their state over the next 12 months. The question has been included in the survey since late 2009. It is effectively a gauge of the sentiment towards housing from an asset price perspective.

As chart 7 shows, it has proved a very useful near term indicator of the annual change in dwelling prices. There is of course a self-fulfilling aspect at work. If households expect prices to weaken then demand for credit will fall and prices will correct lower. The reverse is also true when households expect price growth to accelerate. That is why we believe that momentum indicators of the market are the most important to assess when looking at what is likely to happen to prices in the very near term. The WBC/MI house price expectations index is pointing to dwelling prices continuing to deflate over the near term.

What about changes in interest rates?

Clearly changes in mortgage rates have an impact on dwelling prices (chart 8). And in that sense we could have included mortgage rates on the list of leading indicators of property prices. But we didn’t because the impact of changes in interest rates on property prices shows up in the housing finance figures. That is, changes in mortgage rates impact the demand for credit which is captured in the flow of new lending. And given the leading relationship between the flow of credit and dwelling prices we can pick up the impact of changing mortgage rates on dwelling prices by monitoring the flow of credit.

Having said that, borrowing and lending rates are used by investors for valuation purposes and are the benchmark for assessing what a “good” or “reasonable” return is. That is an important determinant of dwelling prices in the medium term. But in general, when assessing the near term outlook for property prices we can account for the impact of changes in mortgage rates by looking at the change in the demand for credit.


The evidence suggests that dwelling prices will continue to deflate in the very near term. As always, there will be significant variations between capital cities and indeed suburbs within the same cities. But the broader trend should be one of continuing mild price declines.

To date, the RBA has remained relaxed about the fall in dwelling prices because the broader economy has performed relatively well – economic growth has lifted and the unemployment rate has declined. And wages growth is also slowly accelerating (charts 9 and 10).

As long as the downturn in the housing market remains divorced from the broader economy the RBA will continue to signal that rates are more likely to go up than down. But the risk of a negative wealth effect impacting consumer spending is rising the longer the downturn in dwelling prices persists. The monthly reads on retail sales and the quarterly national accounts data on household expenditure will warrant close monitoring for any sign that a negative wealth effect is materialising.


  1. ErmingtonPlumbingMEMBER

    Its all getting a bit boring now,…no sudden crash just years,…maybe a decade of falling prices it seems.
    Someone wake me up when we bottom out.
    Will that be at $500k average Sydney freestanding house price or less,….yawn,…off to sleep again.

      • I’d like to do HIM slowly. Mind you, he’s no worse than the others, just a more entertaining clown, but a clown all the same, nothing more.

    • reusachtigeMEMBER

      OK, give me your number, get off this blog, and I’ll send you a text when the new boom kicks in. Keep your phone turned right up so you hear it. Just a short nap of course.

      • ErmingtonPlumbingMEMBER

        Its called a Google search (in incognita mode of course,…I wouldn’t want to confuse the wife on a phone snoop)

        I have little doubt Reusa has the above number saved on his mobile phone,….favorites list for sure.

    • EP
      wait until after Xmas market will be lower especially Melb, credit is really just tightening now for approvals into Feb and March
      At this stage it’s only credit driven and sentiment hasn’t changed
      I think Euro and US interest rates will rise next year and banks will increase out of cycle hikes
      INT ONLY. will continue to roll to p and i but the brutal change will be the 10 year int only that were taken out from 2010 to 14 because the increase in repayment is double that’s 20s onwards because banks stopped doing 10 years int only in 2015
      CGT and negative gearing I don’t think will have the impact people say because investor is really gone = inv int only is 5% and super resi is finished, people have already factored in that it’s gone
      Think in early 20s there will be land tax on owner occ and council will increase rates
      They just announced increase in funding to prosecute bank executives CEO and GM so there is no way credit will loosen
      You will see gaps lower over next 3 years but slow grind at other times
      Foreign buyer isn’t around
      Immigration will be cut and if there are no jobs after end of 19 they won’t come anyway
      Think there is stage 2 that MB doesn’t talk about robotics and AI from 2024 so think there will be another 30% drop from 30% lower in next 2/3 years
      Think if we look a decade out prices might be 60/70% lower

      So if you watched closely on way up market used to open 5/10% higher over Xmas it wasn’t 1% a month
      Think you’ll see the same = think March April auction market next year will be around 10% lower in Mel Syd from now

    • Wasn’t that what was happening around 2013? About as likely to happen again. Either they collapse completely, or they drop for a while before ratcheting up again.

    • Take a typical poorly built flammable 2BR dogbox in Sydney’s West / South West that has enormous strata levies from the get go – before the defects start appearing. The asking price for those things has been in the 900s. There is no logical price floor for this sh$te and these will crash harder and faster than Soyuz 1.

    • Jumping jack flash

      “Its all getting a bit boring now,…no sudden crash just years,…maybe a decade of falling prices it seems.”

      If they can pull off the slow melt then my prediction is it will take 30 years, give or take, after the last mortgage in this current period of debt-insanity is written.

      During which time interest rates will be locked in. Can’t go up. Going down will do nothing.
      But not only that, costs of living will continue to be gouged by everyone who can get away with it.
      Wages will continue to be stolen and therefore wages, on average, may appear to rise, but wages for the everyday person will stay in the gutter.
      Immigration will still be required to facilitate wage theft.

      So basically, steady as she goes, the only difference is it will be a case of inflation in everything you need, and deflation in everything you own.

      Thanks, RBA. Thanks, Greenspan. Thanks, global debt bubble.

  2. I think this is wrong. Entry level lending permits all the sellers higher on the ladder to borrow more as loan values rise and less as lending falls.
    Currently the deflationary pressure has many sources, the likelihood of a feedback loop NOT occurring is remote. We will get un/underemployment feeding the deflation and it’s baked in.

    “On their own, tighter lending standards should result in a “one-off” style levels adjustment to the flow of credit and a new paradigm should be set. That obviously takes a little bit of time given individual lenders have tightened at slightly different times.”

    • Tighter lending should set prices 20% lower from peak. We are at 9% right now.. almost half way. Falls would stopp there if we don’t have a Ponzi scheme or a bubble. As with any ponzi, the scheme (house prices in our case) must grow and this is why I think we will see another 20% drop on top of the 20% before things stabilise.
      However, I think the government will muscle in and force apra to abandon tighter lending standards and limit on IO loans. I think we will see speculation making a comeback and prices will go up about 25% above 2017 peak.
      Once we hit peak borrowing capacity and completely exhaust all other options we will crash fast and furious. Unless global shock bring thinks forward.
      Scott can talk us into trade war with our Asian and Mid East trading partners too and help fast track things up.
      Also, China might realise that we will never be friends and start openly be hostile by turning tourists and students taps off.
      Lot of risks but not many options left to feed the beast. And in regards to risks, few of them can play out at same time simultaneously..

      • I respectfully disagree. The legal problems the banks are and will experience will limit debt growth in the future.

        This very article demonstrates that banks showed abject disregard for fiduciary and other duties to borrowers with full understanding of that loans could not be repaid, they were supporting speculation by niave punters.

      • APRA can loosen and banks can fudge, but once the consumer believes that it is a bad investment, this will take over. No consumers, no market.

      • lending standards.pft
        its all about jobs
        watch for layoffs over xmas, jan to easter
        whadda they gunna do then??

        QLD seasonally adjusted unemployment rate jumped to 6.3 per cent — the worst result of any state or territory.
        A loss of 5000 full-time jobs caused the employment crash while the number of people participating in the workforce remained stable.
        Queensland’s jobless rate would be considerably higher without the Government’s extraordinary hiring spree adding 7000 extra public servants in the first six months of 2018

      • It is well established that banking realtionships are purely contractual, debtor creditor relationships. There is no fiduciary duty.

      • No fiduciary duty, yes, but that’s why we have regulation, which is supposed to substitute. But it’s a poor substitute because it only works if your regulators are not complicit in an industry wide conspiracy to ignore the regulation. They pretend to regulate us and we pretend to be regulated, as they say.

      • Jumping jack flash

        Regulation of private banks is a pipe-dream – so far as they must’ve been on the pipe when they thought that selling their publicly controlled toe-hold in the banking sector, and then solely relying on regulation of private enterprise, was a good idea.

        (Heyyy, that sounds suspiciously like Thatcherism!)

        I read an article the other day (I think it was actually Pascoe?) that stopped short of praising China for their fantastic and powerful command economy.
        It makes sense to be in awe of it. Regulation only works as expected in one of those.

  3. Housing market crash: House prices could fall 30% in ‘deep recession’ (UBS) … News Com Au

    House prices could fall more than 30 per cent as the country plunges into a “deep recession” if disgruntled borrowers launch class actions against the major banks for breaching responsible lending laws, new analysis suggests.

    The worst-case scenario is one of five outlined by UBS analyst Jonathan Mott in a client note this week, “Catching a falling knife”, in which he warned the outlook for the banking sector had “not been as challenged since at least 2008”.

    “The recently completed bank reporting season suggests the outlook for the banks remains challenging,” Mr Mott said. “However, we believe the rapidly deteriorating housing market is a signal of even tougher times ahead.” … read more via hyperlink above …
    What lessons did the Australian and New Zealand banks and regulators learn from the 2007 Irish housing crash, when the unweighted average median multiple across the major Irish metros fell from 4.7 to 2.8 … wiping out all its banks … and requiring about 70 billion euro (approz $NZ 110 billion ) to bail them out ?

    The current unweighted median multiples for Australia and New Zealands major metros are 5.9 and 5.8 respectively …

    Demographia International Housing Affordability Survey: All Editions
    Subsequent research by the Central Bank of Ireland found high multiple lending a greater problem than high loan to value lending … and imposed a general lending cap of 3.5 times annual household earning (access background research via links below) …

    Mortgage Measures | Central Bank of Ireland

  4. It’s all going to be vanilla flavoured icecream melting until someone adds a hot caramel fudge external shock.

  5. ErmingtonPlumbingMEMBER

    “House prices could fall more than 30 per cent as the country plunges into a “deep recession” if disgruntled borrowers launch class actions against the major banks for breaching responsible lending laws, new analysis suggests.”

    Only “if” disgruntled borrowers launch class actions against the major banks?
    Let the blame game propaganda battles begin!

    • After your tear jerker yesterday about specufestors being people too, I’m not surprised you’re one of the “heard this for the last 25 years” crowd. Strange, I could almost apply that same flawed logic to AGW. Oh dear.

      • Someone who buys a secodn house as an investment is not necessarily evil. I’m sure you would have done it too, if you’d had the funds. It’s been an excellent investment for many people (not for me, I only own my PPOR).

        Don’t be so bitter. It’ll come back to bite you.

        I’ll ignore the AGW comments given the source

      • And yet you extrapolate a narrow view of past experiences to forecast the future, an analogue for what Climate deniers do. Stupidity is the right word.

      • And yet you extrapolate a narrow view of past experiences to forecast the future

        Forecast the future? Where did I do that?

        Your generation seems to have given up on reading comprehension.

    • We’ve been on the verge of a house price collapse how many times in the last decade?

      We haven’t seen the falls we have seen so far for close to 30 years, so what’s happened in the last decade seems pretty irrelevant.

      • Crashes are always off a high base. The implication of “just a correction” is the falls are business as usual, which is not the case if they’re the largest falls in 30+ years. Certainly, they’re bigger than any in the life of this blog, so other occasions where falls were less severe aren’t good predictors.

    • ErmingtonPlumbingMEMBER

      Well in that case then, lets Fk all of these insurance companies out of our society and economy then,…been making cnts of themselves for way to long now.

      • Careful what you wish for … if things become uninsurable, lots of businesses stop or increase prices to account for risk, and you won’t be able to buy many basics at a reasonable price. 👀

      • Jumping jack flash

        “Uninsurable” is a bit of a strange concept.

        If things were actually uninsurable then there would be no need for insurance, nor the companies that provide it. I can’t really see that happening.

        Rather, the concept of what is insurable will change, and probably the premiums too.
        Like that health insurance for pets you can get now.

        In a worst-case scenario the enormous amount of money spent on insurance would simply be directed to whoever was game enough to say they’d be prepared to insure the “uninsurable”.

        At the end of the day its all a bit of a ponzi anyway. Insurance companies probably work on the idea that everyone isn’t going to need all the insurance to be paid out at the same time.

        Its also likely that AGW isn’t going to swoop in and every possible AGW-induced disaster occur simultaneously. No, you’ll get an ice-shelf break off here, and a desert expanding there, and a sea-level rise some time after that, during which time all those people will still be paying their premiums.

    • Reminds me of that moment in the Big Short when they say the housing market and MBS have never fallen, so only a fool would short them… gets laughed out of the big banks etc… then they come back all salty like because the whole market has tanked.The important lesson is that, just because it’s never happened. Doesn’t mean it can’t happen in the future.

      • Ermington, we used to have state owned insurance companies which acted to keep the other participants honest. They were sold off in the Kennett Greiner era. We need to return state owned insurance companies that are financially viable but are also honest and can set standards for the industry.

      • “Every bank should keep a laughing department where absurd valuations and ridiculous securities could be laughed off the premises.”

      • The important lesson is that, just because it’s never happened. Doesn’t mean it can’t happen in the future.

        Sure, but there is a large number of people and institutions working very hard to make sure it does not happen

  6. What about another hypothesis. With lending standards tightened we are seeing more people who apply but don’t get enough ‘money’ approved to be able to buy what they originally intended to buy. They then simply don’t go ahead with the pre-approval or the subsequent actual approval. Happened to myself and my wife – which I was quite thankful for.

    Now as you know standards are tightened, and you see house prices dropping, people go back to saving a bit more deposit and tightening their spending over a 6 month period as is now required. People cut back on all the things that the bank doesn’t like on their expense reports now. Maybe they end up deciding to wait longer while the market slowly drops anyway.

    This could explain the lower numbers of approvals and would predict a gradual drop in value of approvals ahead.

    • I think this is the case for a certain amount of potential OO ATM. I was thinking of starting to look to buy at the end of 2019, but I’m probably going to push that back further. In the meantime becoming even stingier with spending and trying to work as much as possible.

    • I agree – a quite sensible strategy to adopt.

      The problem is there is another term for ‘all those things the bank doesn’t like on their expense reports’, it is called ‘the broader economy’. Extravagant spending on crap is the other pillar of the ‘Strayan ‘economic miracle’.

      All we need now is a surge in personal bankruptcies to add to collapsing RE prices / volumes and consumer pullback and you’ve got a Mozambique Drill to the economy.

      It is on for real this time gents.

    • They mention there is “less demand for credit” (i.e. ‘Therefore we conclude that tighter lending standards are not the primary driver of the acceleration in the downward trend of housing finance”) which I would agree with intuitively. Events already done typically are priced in. What’s causing the continual downturn isn’t approvals but a lack of demand for credit in the first place – and it’s pretty easy to understand why. If I wanted to buy an investment and couldn’t get approval I could always buy a lower priced investment that would require a lower loan size/payout – right now however less people want to buy at any price.
      On the ground anecdotally most investors are scared of any tax changes coming; and the complete systemic failure of the housing market/banking system/loss of job that might result. No point taking risk now hence the lack of demand. If for some miracle (highly unlikely) that Labor doesn’t get in then might be interesting to see what happens to prices.

  7. The Traveling Wilbur

    “prices will continue to deflate”

    LOL. Words. Funny.

    That said, why would a legal entity with a fiduciary responsibility (or two) loan 6 and 7 figure dollar amounts to customers (to whom they are obliged to assess as worthy according to regulation) when the value of the asset the huge pile of borrowed dosh is for, is, according to the country’s flagship bank, going to deflate faster than Reusa after finding out the pictures he received from his builder of his Qld IPs he’s had built are all fakes? Why would any sane lending institution do that?

    Saying it was a bit of negative sideways movement that would resolve itself shortly makes far more sense. Well it would. If they’d done that.

    • Is said flagship bank actually still offering loans with this asset as collateral?
      Actions tend to speak far louder than words. When the banks stop lending to buy real estate, then i’ll believe they believe it’s all going to crash down.

  8. MountainGuinMEMBER

    Well the debate about whether these price falls will hit economy will be settled once Xmas retail data comes out.
    The xmas period also normally has alot of preprepared media in MSM news outlets and it is oh so easy to write some real estate doom articles now for use later.

    • JamesTheBearMEMBER

      They were getting the hope police out this morning on Channel 7. Spruiking that this year will be the best Xmas sales ever….can’t see it myself.

      • The second baby boom of the mid 00’s these kids probably already have all the trinkets, so i see spending on xmas pressies for kids being low as their all addicted to fortnite. I cant even get my boys excited about buying a tinnie.

    • Depressing, I drive past this regularly and think, thank god I don’t live there. It’s part of my desire to go semi-rural. For my health and sanity above all else.

      • Living there as a tenant would be totally OK, knowing gladly you can pack and leave as soon as your lease runs out. Owning or buying means your house is now unsaleable and you’re stuck there listening to that horrible tyre music 24/7 and inhaling CO emissions in copious quantities. Oh, the dream of home ownership, ah?

  9. I bought a while back that CBA would jettison Airdrop pretty quickly. He’s been more or less on the money for a couple of years now.

  10. I hope this is just the Kindergarten explanation otherwise we’re more F’ed than I thought.
    Honestly calling this shite modelling just gives modelling a bad name.
    Why not simply plot the Aggregate and make some insightful comment about it being closely correlated with the sum of the elements?… least than I’d know (or hope) that you were taking the pi55.
    Seriously is this the best that the CBA has to say about something that’s directly correlated with mortgages ( the core driver for 80% of their business).
    If I traded CBA shares, I’d be taking a long hard look at my options.


    Spruik, dressed up as gloom. This bloke sounds like he has a PSYWAR background. On the one hand you have the calamity of Uber drivers and foreigners defaulting because they cannot get finance to settle. But the fall in prices will be limited to 10%.

    For those speculators who could settle, Mr Satterley said many would have to resell quickly because they could not afford to fund the repayments and this, combined with the fallover in overseas sales, would contribute to price falls of as much as 10 per cent – but not a crash.

    “We predict land in these localities correctly priced at today’s value will adjust quickly by 7.5 per cent to 10 per cent. A 400-square-metre lot correctly priced at $320,000 is likely to become $288,000 and a 350 sq m lot priced at $295,000 will come back to $265,000,” he said.

    Look, if I were in the property development game at this juncture, I would be using every trick in the book to get press like this to coax the last few minions who can still get credit. It is disappointing that the AFR just churns out these press releases without even reading them, or bothering to question these ridiculous statements, but that ship sailed long ago.

  12. It’s the fact that sentiment has started to change, that to me, is the most important metric. You can talk about credit, immigration, bank lending etc, etc until the cows come home, but ultimately the bubble was built on the rock solid religious belief that house prices always go up. That belief has been rocked to the core in the last few months and will never be as strong again. There is a growing cohort out there that now needs strong evidence that house prices always go up before they will dip their toe in the market. Getting them back into the church isn’t going to be an easy (or I would say even possible) task. Bring on all your stimulus and we’ll see if it makes any significant difference. It will be a temporary boost at best. The believers are drying up.

    • Yes Mike, the Church Of Propertology is running out of true believers as it has in other parts of the country and overseas similarly to the Church Of Cryptos……….FRIGGIN’ MORONS!!!
      From FOMO to OH-NO………he he he he he ….. leveraged speculation is NOT investment

  13. At least the CBA acknowledged two important drivers of the housing bubble – namely population growth and foreign investment demand, including from China. What they did not mention is the word immigration in relation to population growth, which is where most (if not all the population growth is coming from). This is a small start towards a more realistic public discussion by the mainstream public players of the issues underlying the housing bubble and its relationship to the big Oz program.