Laugh of the Day: "No Risk of Housing Bust" says Australia Central Banker

"No Risk of Housing Bust"

In case you need some humor today, please consider No risk of housing bust: RBA

Australia is not at danger of a collapse in the housing market, a top central banker says, again playing down concerns that Australia could suffer price falls like those seen in the United States or parts of Europe.

Speaking at a mortgage conference, Reserve Bank assistant governor Guy Debelle said he was more concerned about the outlook for the European Union and the uncertainty that was causing globally.

Asked about fears of a housing collapse in Australia, Mr Debelle said there was no oversupply of housing in the country, households were well able to manage their debt levels and mortgage arrears remained very low.

"This (housing risk) is not something that keeps me awake at night," he added.

No Oversupply?

For years I have had people emailing me that a housing bust was impossible because there was a critical shortage of houses in Australia.

I calmly point out we heard the same story in the US for years as well. Of course, in the midst of a bubble, no one wants to hear any rational explanations.

Thus, a few days ago I had to laugh at this Bloomberg headline: Vanishing Households Undercut Claim of Australia Shortage

Australia has almost 1 million fewer households than assumed in government forecasts of a housing shortage, raising doubts about a supply shortfall cited as the main reason the nation will avoid a U.S.-style crash.

The Pacific nation had 7.8 million households, data released yesterday from the 2011 Census showed. That compared with estimates of 8.7 million as of June 2010, according to the latest figures used by the National Housing Supply Council, a group created by the government in May 2008 to monitor housing demand, supply and affordability. Australia’s population also grew by 300,000 less than previously estimated, to 21.5 million.

“There’s been a bit of a disconnect between the estimates between the census points and the actual census data,” said David Cannington, Melbourne-based economist at Australia & New Zealand Banking Group Ltd. (ANZ) “My feeling is that some of the underlying housing demand numbers will be revised down.”

Home prices across Australia have seen quarterly declines since the beginning of 2011 as global economic uncertainty and fears of overpaying for properties in the English-speaking world’s most unaffordable housing market kept buyers sidelined.

Dwellings in Australia cost 6.7 times the average annual income as of the third quarter of 2011, Illinois-based consulting company Demographia said in a report in January.

The increase in the number of people living in group households and in apartments and townhouses backs this up, said David Collyer, campaign manager at tax reform advocacy group Prosper Australia.

“Young adults have gone back home with mum and dad, or are sharing houses,” said Collyer, who argues that Australia has an oversupply of housing based on statistics showing water usage and new building data. “Household sizes have gone up even more than people think, and the oversupply of housing will be revealed to be even worse than we thought.”

As more Australians live with friends or parents to combat falling affordability, the number of vacant dwellings rose to 934,471 in the 2011 census from 830,376 in 2006.

Housing Shortage With 934,471 Vacant Homes

Allegedly there is a housing shortage with close to a million vacant homes.

At the peak of every bubble there always appears to be a shortage. There appeared to be a shortage of Florida condos in 2005 as well.

The nutcases really believed Florida needed more condos. The nutcases at the RBA now believe "no risk of housing bust" in Australia, right in the midst of what I believe will be a decade-long implosion. What a hoot.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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