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:
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