Sydney property set to slump, says Residex: Gavin Putland comments this article "contains some suspiciously precise predictions from Residex on property prices to 2006. All figures predict growth at a reduced rate. But how can you be so precise when the market is in a bubble? Current prices cannot be justified by rental yields. They can be justified only by the expectation of further price rises. That, by definition, is a bubble -- the `B' word that slipped out of the mouth of Treasury Official Ken Henry this morning (Tuesday). And a bubble inflates at an unpredictable rate and bursts at an unpredictable time, making nonsense of all predictions of future growth." One wonders, however, whether Fred Harrision and his supporters would entirely agree with the statement that the bubble bursts at an unpredictable time. According to the 18yr cycle, the bust is set in Australia for 2007.

Meanwhile, Treasury's Ken Henry has described the boom as a "housing bubble", although he immediately warned the asssembled journalists not to report this!

Also "there was a split between the Treasury and the Reserve Bank, with the Treasury pushing for an interest rates cut because of its concerns about the weak international economy, and the Reserve Bank resisting because of its concerns about the red-hot housing market and high levels of consumer debt." This illustrates the fundamental contradiction and failure of contemporary economic and interest rate policy: the problem is the unsustainable land booms that periodically occur, but the only proposed remedy, rising interest rates (which doesn't work anyway) also damages the 'real' economy. Public appropriation of site rent through taxation policy would directly address and terminate the problem of land booms without harming the 'real' economy but this of course is never mentioned by neo-classical economists or the bureacracies they dominate.

Sydney property set to slump, says Residex: Gavin Putland comments this article "contains some suspiciously precise predictions from Residex on property prices to 2006. All figures predict growth at a reduced rate. But how can you be so precise when the market is in a bubble? Current prices cannot be justified by rental yields. They can be justified only by the expectation of further price rises. That, by definition, is a bubble -- the `B' word that slipped out of the mouth of Treasury Official Ken Henry this morning (Tuesday). And a bubble inflates at an unpredictable rate and bursts at an unpredictable time, making nonsense of all predictions of future growth." One wonders, however, whether Fred Harrision and his supporters would entirely agree with the statement that the bubble bursts at an unpredictable time. According to the 18yr cycle, the bust is set in Australia for 2007.

Meanwhile, Treasury's Ken Henry has described the boom as a "housing bubble", although he immediately warned the asssembled journalists not to report this!

Also "there was a split between the Treasury and the Reserve Bank, with the Treasury pushing for an interest rates cut because of its concerns about the weak international economy, and the Reserve Bank resisting because of its concerns about the red-hot housing market and high levels of consumer debt." This illustrates the fundamental contradiction and failure of contemporary economic and interest rate policy: the problem is the unsustainable land booms that periodically occur, but the only proposed remedy, rising interest rates (which doesn't work anyway) also damages the 'real' economy. Public appropriation of site rent through taxation policy would directly address and terminate the problem of land booms without harming the 'real' economy but this of course is never mentioned by neo-classical economists or the bureacracies they dominate.