Australia's housing bubble will burst - economists

Of course nobody believes them. The housing boom will go on forever, and sparsely populated Australia will be immune from what's already happened overseas. People are still investing in it, assuming the price will continue up endlessly. How can it?

The dire consequence has been the rise in the unconsolidated household debt to GDP ratio from 46 to a record 111 per cent between 1993 and 2010 — lifting residential land prices far beyond economic fundamentals. 

As history and recent international events have plainly demonstrated, the experts are generally oblivious to asset bubbles, let alone the damaging impacts of a collapse on the economy and broader society. Australia’s economics profession has a perfect 100% failure rate in identifying stock and land market bubbles and predicting the ensuing chaos; the path of least resistance demands wilful ignorance or dismissal of inconvenient facts. 

But, as the mainstream media tells us: ‘this time is different’. 

If history is a reliable guide, a mountain of phantom wealth will be destroyed during a major bust, triggering a severe downturn in the economy and increasing unemployment. Australia has not experienced a recession since the early 1990s, breeding a sense of complacency. The end of the largest housing bubble and mining boom on record suggests Australia may not be the ‘lucky country’ for much longer. more