The difficulty of spotting a bubble

In Property on 21/04/2010 at 3:54 am

A professor has to climb Oz’s highest mountain because he bet Oz residential property prices would fall 40%: it went up 20%. Could have worse. He could have sold his hse. Economists are divided whether Oz residential property is a bubble

He was one of those that called the credit crisis of 2008 about right, like Robert Schiller. So he is no nutter.

With escalating prices in a recession and prices expected to fly because economic recovery is strong, S’poreans should remember what he said, When people can no longer handle the debt, or when the debt stops growing, prices will come down, and we will face the same deleveraging crisis as in America.

  1. I’d agree with the principles behind his words. Steve Keen’s failure was in underestimating the strength of the banks’ due diligence and the willingness of Australians to cut down on discretionary spending to pay the mortgage.

    Three years ago in 2007-2008 we were facing interest rates of 9-10%. And yet the property market held.

    In the aftermath of the GFC, wages are continuing to go up due to the resumption of the mining boom and the shortage of skilled labor.

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