I just did a Google Trends search for “Housing Bubble” and then drilled down to results for Australia…
This is what came up:
Google Trends 29 June 2015
For those of you unfamiliar with Google Trends it’s a free service offered by Google which shows the popularity of search terms relative to total search volumes across the globe. It’s a good way of getting a feel for, you guessed it… what’s “trending”.
So what’s there to make of this graph?
The value of investor loans (as opposed to loans for homebuyers / owner occupiers) has more than doubled in the past four years, which is unprecedented.
This has been fuelled by favourable tax outcomes to investors who negatively gear their properties, and also by SMSFs who borrow to fund property investments (also tax effective). I’ll explore these topics another time.
What’s important for now is that the “bubble” discussion seems to have gathered momentum ever since APRA moved to slow growth in investor lending, in December last year. I’m not saying it’s the wrong thing to have done, but it certainly got people talking…
As the graph shows it’s very much now in the mainstream media.
Treasury boss John Fraser was the first senior official to start the bubble talk and the Reserve Bank Governor Glenn Stevens backed him up afterwards.
The counter-arguments came from Treasurer Joey Hockey and Federal Liberal MP Craig Lundy who basically said that with banks lending and interest rates at historical lows it’s technically a good time to buy.
There’s nothing wrong with healthy debate but if it saturates the media at what point does it become a self-fulfilling prophecy?
