The "Ponzi" is fuelled by market distorting govt policy that gives generous tax benefits to property investors no matter how many properties they finance with other people's money-OPM. How many thousands of owner-occupier buyers have been out bid by property investors/speculators using govt subsidy and leveraging to the hilt to build their property portfolios I wonder.
http://reiv.com.au/home/inside.asp?ID=162
Bots, thanks to banking deregulation, total credit growth was running 10-15%pa from the early 90s until GFC, while nominal GDP rose from 5 to 7.5%pa in the same period.
From 2000 to GFC, housing credit was expanding at 15-20%pa! That's unsustainable asset price inflation in my books because the interest pmts have to be relieved from other channels, channels growing at half to a third the rate.
So when you ask is housing in a bubble, I retort has housing credit been in a bubble relative to the rest of the economy? I'd say unequivocally yes.
But bubbles don't have to burst.
They can sit inflated for years and wait for everything else to catch up. They can develop slow leaks.
They can burst in the face of an economic stressor.
In my view, flat Brisbane prices this year are entirely congruent with a bubble that lenders and/or borrowers are having difficulty inflating further. What remains to be seen is how property prices deal with an economic stressor - such as credit tighter than Joe Average could have reasonably foreseen.
Re the Glenn Stevens quote, I find it quaint that the RBA denied for years there was even the hint of a problem with house price growth. It apparently just became a problem overnight some time in March this year.
Some charts to ponder.
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