Australia’s property bubble
James Glynn has an odd article today, headlined “Australia Tries to Avoid a Housing Bubble”:
Home values have started rising again, after falling in 2008, and are slightly above their record high reached in February last year…
One reason that Australia’s housing market is comparatively tight right now is that it didn’t get too out of control during flush years. Although Australia had its property boom between 1997 and 2003, policy makers were able to prevent prices from getting too far out of whack.
I think that by most metrics Australia’s property bubble was bigger than that in the US. But let’s go to the tape:
Between 1992 and 2008, real Australian house prices, as measured by the OECD, rose by 95% in real terms, while US house prices rose by 40%.
Or, for that matter, ignore the crazy bubble years of 2002 and 2003, and just look at house prices since Australian “policy makers were able to prevent prices from getting too far out of whack”: between 2004 and 2008, US house prices rose 12% in real terms, while Australian house prices rose 17%.
Australia did have a property bubble, and prices did get out of control, especially in 2002-3. The main difference between Australia and the US is that Australia’s property bubble hasn’t burst yet.
Update: See also Hempton.