Kosciuszko Walk 1pm Thursday 15th Federation Mall

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On Thurs­day April 15th at 1pm, Steve Keen will begin a walk from Par­lia­ment House to Mt Kosciuszko, to ful­fill the famous bet with Rory Robert­son over house prices.

Keen claimed that, just as Japan­ese house prices had fall­en 40% since its Bub­ble Econ­o­my burst in 1990, so too would Aus­tralian house prices. In Octo­ber 2008, Robert­son chal­lenged him to a bet that this would nev­er hap­pen at a debate in the Par­lia­men­tary Library, where the los­er would have to walk from Par­lia­ment House to Mt Kosciuszko.

Since then, Aus­tralian house prices have rebound­ed from their biggest ever quar­ter­ly fall of 3.8% in Sep­tem­ber 2008 to their biggest ever quar­ter­ly rise of 7% in 2010. In Decem­ber 2009, house prices were 8.3% high­er than the pre­vi­ous peak in March 2008, and 14.5% high­er than the low they hit in March 2009, just nine months ear­li­er.

Keen is there­fore doing the walk, but he has turned it into a protest at gov­ern­ment pol­i­cy that has delib­er­ate­ly pushed house prices high­er.

“This lat­est house price bub­ble began when the gov­ern­ment dou­bled and even tripled the First Home Own­ers Grant,” Keen observed. “Along with the deci­sion to allow open slather pur­chas­es of Aus­tralian prop­er­ties by over­seas buy­ers, the Rudd Gov­ern­ment lit a fuse under house prices.”

“These poli­cies reversed the GFC inspired trend for Aus­tralian house­holds to reduce mort­gage debt, and played a major role in reduc­ing the GFC’s impact on Aus­tralia. But they did so by repro­duc­ing the con­di­tions that led to the GFC in the first place—Australia has tak­en the “hair of the dog” approach to cur­ing a debt hang­over, by bor­row­ing yet more mon­ey,” Keen said.

Keen and over two dozen sup­port­ers will set off from Fed­er­a­tion Mall at 1pm this Thurs­day, wear­ing Tshirts embla­zoned with the words “I was hope­less­ly wrong on house prices; ask me how”, as required by the bet.

“The Tshirts also car­ry answers to that ques­tion,” Keen not­ed, “with graphs high­light­ing how the First Home Own­ers Grant has caused house price bub­bles, the his­toric lev­el of pri­vate debt that Aus­tralia now car­ries, and how Aus­tralian house prices com­pare to Japan and the USA.”

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Keen plans to com­plete the 225km trek to Mt Kosciuszko by Fri­day April 23rd, run­ning rough­ly 15km each morn­ing and walk­ing 15km each after­noon. “Sup­port­ers will gen­er­al­ly walk, but some are com­ing on bicy­cles, and even stilts! I’m the only one who is required to do the whole dis­tance on foot,” he said.

Keen notes that Rober­ston may one day have to fol­low in his foot­steps. “My call was always over the longer term—when house prices fall, they fall a lot slow­er than share prices. The gov­ern­ment has sim­ply delayed the inevitable by engi­neer­ing this lat­est bub­ble.”

ENDS. For fur­ther infor­ma­tion, con­tact Steve Keen by email (debunk­ing AT gmail DOT com) or phone on 0404 464 523 or 0425 248 089. Vis­it www.keenwalk.com.au for dai­ly bul­letins from The Walk. The T‑shirts are avail­able for pur­chase for $35 each includ­ing ship­ping in Aus­tralia. Click here for the E‑Shop (T‑shirts will be deliv­ered first to those on The Walk or attend­ing the open­ing; oth­er orders will be filled after The Walk fin­ish­es on April 23).