> Is it true that Australia is in the late phase of an epic housing bubble,
> and that the bubble is starting to burst?
Well Australia's at the top of the league table for departure from the long-run average dwelling-price/income ratio. But I'm not sure how meaningful that measure is - given that the ratio has gone up and rarely down (and then not much) as far back as the stats go. There was a house-price boom from 2000 to mid-decade based on a great infusion of credit, ultimately from overseas, through banks and finance companies. But there was no building boom, which is one great difference between here and the US, the other being that Australia has not had a recession. So there is no great overcapacity and rents continued to rise. Since 2008/09 or so house prices have been taking off again. But there's no sign of people failing to meet payments or anything; for the most part debt is correlated with disposable income.
There's no question it's been deeply socially irrational, effectively people getting bigger mortgages to bid against one another for homes, coupled with rising income inequality such that those with higher incomes can afford to raise the bar. The 2000s boom was associated with a substantial rise in the proportion of dwellings bought for investment purposes, so investors have been crowding out owner-occupiers.
I've argued within the Greens and elsewhere that it's much better to talk about a crisis of affordable housing rather than of a 'bubble', even though I wouldn't argue that there will definitely be no price reversal. There's a group of excitable people talking about the inevitable housing crash, as they have been for years. The politics of this entails doing nothing about supply or affordability because it will sort itself out, and treating investors and wealthy kids spending their parents' money as irrational rather than as people who are doing well out of the situation.
Mike Beggs