The Australian’s Robert Gottliebsen has written an interesting article, based on research by former ANZ Bank director John Dahlsen, explaining how Australia’s housing obsession has diverted resources from the real economy and is stifling the nation’s productivity:
In the decade before the 1987-89 crash banks poured vast sums into business credit but they were enticed by property developers and the 1987- 89 crash triggered heavy losses…
Twenty years ago, around 2001, housing credit became greater than business lending and it has never looked back. It played a big part in the latest house price boom. But the gap is not sustainable particularly as we are way out of line with the rest of the world. Residential mortgages represent well over 60 per cent of Australian bank balance sheets — more than double the US and UK and much higher than similar countries.
