House prices too high

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I’ve never been alarmist on the possibility of house price bubbles in Australia, but I just came across a piece in Business Spectator by Chris Joye. Chris argues that house prices are not too high, and he refers to part of a speech by RBA Deputy Governor Ric Battellino who isquoted as saying “if you look across the whole country, the ratio of house prices to income is not that different to most other countries.” What spooks me is that this quote is remarkably similar to the Greenspan “local froth” quote from 2005, when Greenspan argued that there wasn’t a national bubble in the US, “only a lot of local bubbles”. …   [Read Full Text]