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Popping a housing bubble fantasy

By Christopher Joye - posted Thursday, 7 July 2011



Unless you believe that we are going to get double digit inflation and 17 per cent mortgage rates, which most observers think are near impossibilities, the housing market benchmarks of the 1980s are irrelevant to home owners in the second decade of the 2000s. The same principle applies to The Economist’s analysis.

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It would, of course, be wonderful if our ever-changing, multi-dimensional world could be judged by crude long-term ratios that blissfully ignore all sorts of key facts. Unfortunately, that's just a recipe for confusing further an issue that already has many confused.

Looking ahead, it is highly likely that Australian house prices will track household earnings in what PIMCO's Bill Gross has aptly described as the 'New Normal'. 

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This article first appeared Property Observer on July 5, 2011.



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About the Author

Christopher Joye is the CEO of Rismark International and was the principal author of the 2003 Prime Minister’s Home Ownership Task Force report. You can find Christopher's blog at Christopher Joye's Concrete Detail Blog.

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