Is Panic Setting in the Australian Housing Market?

Around the Western World a housing bubble was created by artificially low interest rates designed to stimulate the economy after the dot com crash of 1999.

In each country as individual housing bubbles began to burst, newspaper articles began appearing telling people to remain calm.

And it is no different in Australia.

Aussie 'real estate expert' Andrew Winter is the latest crash-denier.

Consoling those concerned about Real Estate in the Land of Oz, Winter tells readers that the current slowdown in property sales is not a sign that the Australian housing market is about to crash.

• "Property pundits often make the statement that the housing market is about to crash. This occurs a few times every decade but it seems to suffering overuse since the global financial crisis in 2008."

For Winters it's all part of the regular housing cycle and a minor downturn is to be expected.

• "So it was not surprising - although it was a little disappointing - to see recent television reports predicting doom again and claiming price falls of 15% and more off the average Aussie home."

In the article Winters displays classic rationalization. When prices are rising, the increasing average housing price is constantly touted as a great indicator about the strenth of the market. 

But when prices are falling, experts like Winters ask you to question the 'average' price and how it is calculated. If you do this, the gloom and doom predictions are then dismissed:

• "These predictions are based on statistics - statistics that have been collected over the past year. So in effect, it's a rear vision image that we're being told about. Prices have steadied, and dropped in some markets, it is true, but there is always an upside to a decreasing market and that is of course that it is great for buyers."

Winters tries to calm Aussies that Australia will be different from the rest of the Western World's credit induced housing bubble:

• "The heavy losses being faced in the UK and US were caused by bad lending practices and housing policies that just don't exist in Australia. They stretched residents in those countries well beyond their means and created a property bubble. But even in these depressed markets, there are signs of recovery."

Just like in Canada, Aussie's are being told 'it's different here'. Perhaps the best quote from that article is this ridiculous rationization denying what is coming:

• "Owning a home remains an Australian dream. That dream creates a demand which together with a solid economy protects us against crashes."

Alrighty then.

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