Advance Notice

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I’m speak­ing at a United Nations Envi­ron­ment Pro­gram con­fer­ence in Bangkok next week, and giv­ing some pub­lic talks there as well, so I’ve writ­ten my posts for the next two weeks for Busi­ness Spec­ta­tor already–on the topic of Aus­tralian house prices.

The ABS will also release its House Price Index data next week (on Mon­day Novem­ber 4th) and I’ll try to update a key graph in next week’s post–the cor­re­la­tion of the accel­er­a­tion of mort­gage debt to change in house prices–with that data before Busi­ness Spec­ta­tor posts my arti­cle. Prior to the ABS data being pub­lished, this indi­ca­tor is con­sis­tent with house prices ris­ing sub­stan­tially in real terms (see Fig­ure 1).

Fig­ure 1: Mort­gage accel­er­a­tion and house prices before next week’s ABS data

How­ever it’s also inter­est­ing to note that the level of accel­er­a­tion has been trend­ing down over time—the peak in 2007 of 2% of GDP p.a. p.a. com­pares to just over 1% in 2010 (even under the influ­ence of the First Home Ven­dors Boost). I expect this is because mort­gage debt con­tin­ued to rise in Aus­tralia after the crisis—it just grew more slowly than GDP for a while—whereas it fell in the USA (see Fig­ure 2). The result is that there is very lit­tle head­room for mort­gage debt to accel­er­ate.

Fig­ure 2: Amer­ica has delev­ered, but Aus­tralia has not

Of course, the fact that Self-Man­aged-Super­an­nu­a­tion Funds can now indulge in lev­ered spec­u­la­tion on house prices and call it invest­ing may mean that there’s more head­room here than Fig­ure 2 implies. I’ll dis­cuss this and other issues in a series of posts in Busi­ness Spec­ta­tor, start­ing with next week.

For read­ers in Thai­land, the pub­lic event there is being organ­ised by the MBMG Group. Click on the link below if you’d like to attend:

What the Future Holds Event

Tues­day, 5 Novem­ber 2013  7.00–9.00pm (6.30pm Reg­is­tra­tion)

Sher­a­ton Grande Sukhumvit

  • Pro­fes­sor Steve Keen, the lead­ing Aca­d­e­mic expo­nent of Min­skyian insta­bil­ity
  • Richard Dun­can, New York Times best-sell­ing author
  • Paul Gam­bles, Man­ag­ing Part­ner of The MBMG Group

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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  • ken

    One rea­son our house prices haven’t col­lapsed is that our gov­ern­ments have been bor­row­ing like never before, and try­ing to hide it. See the RBA Chart Pack for Gov­ern­ment and the Non-fina­cial Pub­lic Sec­tor Net Debt tab. From about -% GDP to +33% in 5 years. A lot of this is in the pub­lic cor­po­ra­tions, and when they max out, the stim­u­lus that they are giv­ing to the econ­omy will dis­ap­pear, and we will just have to help pay the debt.

  • Bhaskara II

    Pro­fes­sor Keen,

    I hope you get some time to enjoy and learn about Thai­land and the peo­ple there. I don’t know much about Thai­land but every time I scratch the sur­face I’m very impressed. They have a great cul­ture and his­tory and have many valu­able things to learn. Beau­ti­ful peo­ple and land. But, I’m show­ing my igno­rance.