What could sink the property market and drown investors


A growing number of middle-of-the-road, mainstream economists and policymakers now acknowledge that Australia has a housing bubble.

ASIC’s Greg Medcraft got in early, and repeated his warning this year, but Treasury secretary John Fraser and former Liberal leader John Hewson have also used the “b-word”.

While they haven’t all called it a bubble, respected analysts such as Chris Richardson and Shane Oliver have basically told people they’d have rocks in their head to buy property now, especially in Sydney and Melbourne.

And, while it may have missed (or wilfully ignored) the US housing bubble, ratings agency Standard & Poor’s is becoming increasingly vociferous about Australia’s housing risks.

In short, we are as close as we’ve ever been to a consensus that Australia has a property bubble, or at least extremely overvalued markets in its two biggest cities.

But that’s where the agreement between the mainstream and the housing…

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