The Australian Property Bubble Explained with Steve Keen
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The Australian Property Bubble Explained with Steve Keen

Is there currently an Australian property
bubble? Some experts say that there is and that prices in property could fall by as much
as 40% or more. While other experts say that we aren’t. Today, I have with me an expert
in the Australian property bubble, an economist, Steve Keen, who understands this issue like
nobody else. I was really excited to get him on and to understand why he believes that
we are in a property bubble in Australia, to talk through some of the statistics and
to also really get an idea of is this bubble likely to pop in the near future and what
can we do about it as investors. I’m really excited to have this interview today on whether
or not Australia is experiencing a property bubble and what we can do about it. I do want to apologize ahead of time for the
quality of the recording. The internet at my house wasn’t performing very well when
we did this and we’re talking to each other on the opposite sides of the world. Unfortunately,
there are some areas where the audio cuts out or it’s not too strong and the video can
be quite pixelated. So just beware of that, I do apologize for that, but there wasn’t
much I could do. But this definitely an interview worth watching. Steve: Okay. Let’s see if it works with me
calling you. Ryan: Okay, cool. Steve: Share screen. Start. Let’s see. Ryan: Alright it’s just loading. Steve: Yeah. Ryan: Okay. Yup, I can see it. Steve: Okay. That particular graph is what
I’m calling a smoking gun of credit. So the red line is GDP. The blue line is GDP plus
change in debt, which is basically credit – plus credit. And the black line is credit
graphed on the right hand side. Okay. Whenever the blue line’s above the red line, credit
is adding to demand. When it’s below the red line, because people are paying off debt more
than they’re taking on new debt, credit’s reducing demand – credit’s negative. Ryan: Which basically never happens on this
graph. Steve: Well, it never happened in Australia
so let’s take a look at the American, just give me a sec to get to the right part of
it. Right chart here. This is all charts for a book I’m writing right now on the topic.
I’ve got to change that. That’s the UK. Where’s the USA? This will give you just as Australian
in private debt. This is when I started calling the crisis to understand why. So the dotted
line’s the exponential fit to the Australian data and the American data in ratio of private
debt to GDP. Ryan: Okay. Steve: See the trends? Okay. Ryan: Yes. Steve: So exponential increase ratio of debt
to GDP. It’s not the actual level. So here’s the chart from America. Same when I showed
you for Australia a minute ago. Ryan: Okay. Steve: Where you have the GFC maximum boosted
demand coming out of credit being positive and then it plunges. And for quite some time,
it’s negative, so it’s taking demand out of the economy. So we side stepped that. Australia’s
went down to here and bounced up again. And that was because of the impact of the first
homeowner’s scheme. These people dived in and took on mortgages. Ryan: Yup. I remember that time. Steve: And they fall. The trend for this to
go negative. Yeah. And then the second time, around 2012 when, again, we started having
a decline in mortgage debt growth. That’s when people started borrowing for all the
investment projects in mining. So it boost kind of the business side. And then, as debt
started to slow down, they were actually rising as a percentage of GDP. That’s when investors
followed the housing market again. So, consequently, what we have – this is the key one I want
to come down to in a moment. The key relationship is – that’s the chart you can see right now. And I’ll explain the logic when we are actually
in the interview. But what actually drives the market is acceleration of mortgage debt.
So what I’m graphing here, the blue line is change in house prices in America and the
red line is the acceleration, not the change, the acceleration of mortgage debt as a percentage
of GDP. Okay, can you see the relationship? Ryan: Yup. It seems to be in line with each
other. Steve: Okay. Yeah. One drives the other, so
econometrics on this then it’s definitely the case. Accelerating mortgage that drives
change in house prices. Bryan: Yeah, where the red line preceded the
blue line. Steve: Yeah. This is now looking at the – this
is real house prices in America versus Australia since 1986. So America had this big bubble
and crash and now, some real house prices are still high compared to what they were
back in 1986, but not that much higher. Australia’s real house prices have doubled, almost tripled
over that period of time. That’s the same chart I showed you for Australia a moment
ago. Now, what’s been driving it, this is the next chart. This the ratio of mortgage
debt to GDP. So guess which one is America. Ryan: I can still see the same graph as before.
Oh, wait. Hold on. Alright, Australia is the blue line, obviously and it just keeps going
up. And America’s dropped during their burst, basically. During the crash. Steve: Yup. So we manage to avoid that, but
only by taking on more debt. So, consequently, at some point, and we’re approaching it now,
I think. The growth in debt will stop and when it does, house prices will fall over.
The only thing that’s likely to keep them up have been Chinese buying. Ryan: Yup, which is being stunted by the Chinese
government, isn’t it? Steve: Yeah and by the Australian government,
funnily enough. I thought they would have any balls about that, but they finally got
some. Ryan: Okay, cool. Let’s start the interview
and we can go through all this during the interview. Just so you know, my audience tends
to be kind of newer investors so they might own 1 property. They might be looking to get
into the market. A portion of them own quite a few, but the majority of my audience is
more entry level investor. Steve: Yup. Okay. How many viewers do you
have? Ryan: I’ve got a blog, video and podcast.
Combined, probably 150,000 a month. Steve: That’s pretty solid. That’s a good
audience. Ryan: It’s a pretty good audience that I’ve
grown over the years. Steve: That’s impressive, actually. Ryan: Okay. So, I will do like an intro before
our interview and then we’ll just flow on. I’ll do that when you’re not here, so I don’t
waste your time. Yeah? So, I’m excited to have with me today Steve
Keen. Steve, thanks for your time today, I really appreciate it. We’re here to talk about
the potential, I guess, what you consider the definite property bubble that is happening
in Australia. Can we start by explaining to everyone why you think there is a property
bubble and what you have to back this up? Steve: Okay. Most people, when you talk about
house prices, their instant answer is it’s all a question of supply and demand. And I
say, “Okay, I agree with you and I’m going to show why there is a bubble.” which makes
me very unpopular. So the usual, if you think about how can you make this supply and demand
case is say, well, if it’s supply and demand, if supply is tight, therefore, it’s just demand
for housing driving up the price, then that’s not a bubble. That’s the usual logic. Nobody
ever goes and explores the demand side and that’s what I do. So, if you look at the demand
side, what is the demand for housing? Leaving aside the Chinese buying, which it was an
important extra factor in the last 3 or 4 years. Demand for housing is fueled by new
mortgages. Most people who want to buy a house, they’re taking out a mortgage for at least
85% of the 95% of the purchase price. So, the new purchases are taking a 95% of the
purchase price. They can really regard demand, in money terms, as being new mortgages. Ryan: Yes. Steve: Which is change in mortgage debt. Ryan: You’re saying that because people are
purchasing property with a high percentage of debt rather than a larger deposit. They’re
using the bank’s money to purchase property, not their own. Steve: Exactly, yeah. Now, in Australia’s
case, we’re looking at average loan to valuation ratio to at least, on average, at least 80%.
Possibly 90%. So, I’m just ignoring the component that comes from people’s deposits and saying
most of that demand you can say is new mortgage debt. Imagine how much demand there would
be if people stopped taking out mortgage and used only the cash they had saved. Ryan: Yup. Well, not a lot of demand. It’s
pretty hard to – I’m not going to be able save $1 million to buy a unit in Sydney or
something like that. Steve: Exactly. Okay. So the demand is new
mortgages. How many physical buildings people can buy or apartments divided by the price.
So that’s your physical demand. If physical supply is people selling existing properties
plus the new properties coming out of the market. Ryan: So you mean new builds. Steve: New builds and stuff like that. So
you’ve got a physical number of new builds coming onto of the market. So you’ve got a
relationship between the change in mortgage debt and per level of house prices. We’re
not going to go through the mathematics of doing the conversions I’ve done, but you can
get a relationship fairly obviously. If there’s a link between the level of house prices and
the rate of growth of mortgages, then there’s relationship between the change in house prices
and the acceleration of mortgage debt. Ryan: Okay. So that goes over my head a little
bit. So you’re saying that as mortgage debt grows, house prices grow or are you saying
that as mortgage debt accelerates in its growth, that house prices grow? Steve: As mortgage accelerates, house prices
grow. So then to have maintain rising house prices, you’ve got to have accelerating mortgage
debt. Ryan: Okay. Because if mortgage debt stayed
the same, then supply would be quite similar. Not supply, demand, I mean. Supply and demand. Steve: Yeah. Demand will flat line. Demand
would collapse. If demand is coming from new mortgages so if you have new mortgages, you
have that demand. In fact, you need it to be accelerating to be able to get rising house
prices. Ryan: So are you saying that the growth in
the Australian property market over the last, I don’t know what period, has been because
people have been taking on more and more mortgage debt than they have in the past? Steve: Yeah, yeah. The imperial data is overwhelming.
It’s one reason I have any influence of debt. I might have a bit of screen sharing here
just to, first of all, compare the level of debt in Australia and the level of debt in
America because – is that going to be worth doing or not? What do you think? Ryan: Yeah, I think so. Let’s go ahead and
have a look at it because everyone is aware of the crash that happened in the US and if
we can compare that to Australia, I think that would be useful. Steve: Oh, I’ll start. Ryan: I’m just going to turn my webcam off
because the internet seems to be a bit slow. Steve: Yeah. I’ll start, first of all, with
saying that this the chart that got me into making the public warnings I started making
back in 2006 about approaching financial crisis around the world. So if you can see what’s
on the screen right now, the red line is the ratio of private debt in America to GDP and
the black line is the ratio of private debts to GDP in Australia. Ryan: Okay. Steve: When I saw that Australian data, I
so gobsmacked, I feel I’ve got to check the American data to see if this is a global phenomenon
and that’s the chart that I produced. The 2 dotted lines are the trend in the data,
the exponential trend. I just looked at that data and thought, first of all, we’re talking
about the highest level of private debt in post-war history. So you can see the American
data goes back to 1955. So that ratio – oh, ’52, actually. We’re looking at the highest
level of private in post-war capitalism and Australia is actually not as high in the data,
but growing much more rapidly. The crosses has to occur and that’s when I started warning
about the crisis. Now, bear with me for a second, I’ll have
to flip through a few screens here because I know the chart that I want to show is a
few charts. This is all for work for a new book I’m writing which will be coming out,
hopefully, in about September called “Can We Avoid Another Financial Crisis?” and it’s
a book on the global economy, not just Australia, obviously. So this is looking at my analysis
of what causes a crisis. And that is the total demand in the economy is not just GDP, it’s
GDP plus credit. And that’s also the technical issues I’ve come up with that they get me
involved in a debate with mainstream economist and even my own non-mainstream economists
I’ve done the mathematics. I’m very confident of my argument here. Ryan: So can we just explain this? Are you
saying that – so GDP is like how much a country earns. Is that as simple way to explain it? Steve: Yeah. Simple way to explain it. Ryan: You’re saying that when you’re looking
at a country and you’re looking at the economics of that country, you need to look at the GDP
and how much that country earns as well as how much debt they’re acquiring because, obviously,
if they’re acquiring debt, they can use to spend on things like houses or personal things. Steve: Exactly, exactly. And economists believe
that that’s doing double counting. I’ve proven that it’s not because what they think is when
you borrow money – if I borrow money, they tend to think I’m borrowing it from you so
you can spend less and I can spend more and the two cancel out. When you look at bank
lending, banks don’t have to get deposits to lend. They’re lending actually creates
deposits. Therefore, the extra demand coming from credit is added on to the demand from
incomes themselves. Some complicated issues there, but that’s the basic logic. So with
that logic, I started drawing charts like the one you can see on the screen right now.
The red line is America’s GDP, the blue line is GDP plus credit, which is the change in
private debt. And the black line which is graphed on the second Y-axis there is just
the change of debt in that time. And I was saying back in 2006 that it’s going to be
a crisis when the rate of growth of debt starts slowing down and I thought it would happen
both in Australia and America and other countries around the world where I didn’t have data. As you can see, that’s what happened in America.
The crisis began when the rate of growth of debt started to slow down. And for some time,
change in debt was actually negative, so credit was negative. So, for the depth of the downturn
they went through, people were reducing the private debt by up to about almost $1 trillion
a year at an annual rate. And that dip is when America had a serious crisis from here.
When gross debt was growing at $2 trillion a year, down when it was falling by $800 billion
a year, that was the serious crisis. Then it began to turn around, they started borrowing
again. That’s the American data. Ryan: So are you saying that a reduction in
debt – did that happen because of the property crash in America or did that precede and kind
of caused the property crash that happened in America? Steve: The property crash preceded the house
problem. You will see another chart coming up on screen in a moment. Because the argument
for demand for housing being new mortgages, so change in mortgage debt. It affects house
prices. Therefore, the acceleration of debt sets the change in house prices. So to have
rising house prices, you have to have accelerating debt. Ryan: So effectively, if debt stagnates and
just stays equal so it’s not accelerating, then could that cause like a slump in the
market because you’re getting increased supply, but you’re not getting increased debt? Steve: Yeah. And you can see this in the American
data. Take a look at the – the blue line there is the annual change in house prices after
inflation. The red line is the acceleration of mortgage debt. I’ve done the econometrics
on this and mortgage debt causes change in house prices, not the other way around. Ryan: So you can see the acceleration of mortgage
debt basically almost influences the real house price change like with a delay of like
a year or something like that, is it? Steve: That’s about 2 or 3 months delay. Now,
what you get out of this is the house price fall in America began before the global financial
crisis. You’ll see I’ve got a dotted line there marked GFC. That’s August 2007, which
is when the crisis began. So the fall in house prices and therefore the deceleration of mortgage
preceded the crisis itself. So the acceleration will turn faster than velocity does. So you
get the fact that the actual cause of the crisis was deceleration of mortgage debt.
It caused the crisis because the level itself of debt in general is so high. So what you
had, which is the next chart coming up on screen, I think it’ll take a couple of seconds
to turn up there. Ryan: Can I just ask? What did mortgage debt
decelerate in America to then cause that crash? Steve: Well, the only way you can not decelerate
is if debt continues rising faster than income forever. Okay? Ryan: Okay. Which doesn’t sound feasible. Steve: Which isn’t feasible. So if you want
to just to get a rough sort of stylized view of what can happen, imagine you’ve got a minimum
level – let’s say it’s 20% of GDP. And let’s say a maximum of even 200% of GDP, which is
far bigger than the level they’ve actually reached. If you draw a line between the two,
or a curve between them, what you can get is like an extended S-shaped curve. The maximum
rate of change of that debt is where you get the inflection point in the S. And then, the
acceleration is going to be before that point. So, simply the fact that coming from a minimum
level to a maximum level, you’re going to reach a maximum velocity in the middle between
the two and then slow down. Ryan: Okay, yeah. You’re slowing down towards
the maximum point. It’s like kind of if you throw a ball up in the air, it’s decelerating.
Before it hits its peak, it’s already decelerating because of gravity. Steve: Exactly, exactly. So and like if you
throw it from at equals maximum acceleration is from the point you actually hurl it. But
in the case of something like in a car and you floor the accelerator in a car. Then,
for a while, you’re going faster more quickly. Then you reach your maximum rate of acceleration.
At that point, you’re getting faster, but you’re getting faster more slowly. And finally,
you reach maximum velocity. At that point, your acceleration is zero. So you’ve had a
peak and a fall in acceleration before you reach maximum speed. So that’s the reason why these things can
be so deceptive because it’s actually an acceleration factor and acceleration is complicated for
people to get their heads around. Ryan: Okay. So you’re saying that house prices
or like growth in debt – we’re talking about growth in debt or house prices. So say I’m
in a car and I’m flooring it on the freeway and I reach 110 km/hr, which is the max speed
here in Australia. And then I let go of the gas, I’m still obviously moving forward towards
my destination. Is that the equivalent of – like that movement forward, is that the
equivalent of growth in house prices? Or you talking about that’s the equivalent of growth
in mortgage debt or acceleration of mortgage debt. Steve: It’s equivalent in rise of mortgage
debt. Because that’s driving the whole thing, you’ll get the change in house prices will
follow not your speed of the car, but the acceleration of the car. So once your acceleration
starts to slow down, you might be a maximum acceleration of say 1m/s/s, you know? But
you’re getting 10, 20, 30, 40m/s drive speeds. When that goes from 1m/s/s starts becoming
0.5m/s/s, at the turning point of acceleration, that’s when your house prices will start to
fall. Ryan: Okay. And so, how do we, as everyday
investors, keep tabs on that and even know when that’s happening? Steve: Well, you can actually – my website
has that data on it, but I’ll just give your people an idea of just how big this has become
in Australia and why it’s so potentially dangerous. I’ll go back to sharing screens again. I want
to show you this chart here. This is your level of mortgage debt compared to GDP in
Australia and America. And you can see if you go back to 1990, we had about 20% of GDP
as a mortgage debt level, they had about 45%. We reached equality in roughly in 2000. When
the prices hit, they started to slow down and then fall. They peaked at about 75% of
GDP as a mortgage debt level and we were about at the probably 80% mark. Now, America’s mortgage
debt is about 50-55% of its GDP and ours is 90%+. So that much additional debt’s been
added to maintain the house price rise in Australia. Now, I’ve got to muck around with quite a
few charts. This is work that I’m doing for a book so I haven’t quite put it all together
properly yet, but here’s the chart that I want to show. This is looking at the – I’ve
showed you the acceleration of mortgage debt in America and house price change relationship
there. Now, people can say Australia is different. Well, no, it’s not. This is the Australian
data. And it’s not quite as strong as the Americans in terms of the link, but you can
see mortgage acceleration is driving house price change. From 2012, which is when this
new bubble took off, right up to now, acceleration has been getting higher and higher. So the
red line is mortgage acceleration. That’s been what’s driven house prices up since 2012.
Now, at some point, and I think it’s happening right now, that acceleration is going to start
slowing down and that’s when the house prices start falling. So we’re seeing that turning
up on the Australian data right now. This data is 3 months old. This goes back to September
of last year. Actually, I think it’s only September that I’ve got the house price change
up to. So I’m using the data that the Bank of International Settlements puts together
to have comparable house prices around the world of house price emphasis. We are clearly still on the accelerating phase
there, but if you look at the most recent data, it’s turning, slowing down we’re seeing.
Therefore, there’s falling demand and therefore falling prices. Ryan: So, will these changes, the APRA rules
that they recently brought in, which I did do an episode about, where they’re trying
to, I guess, affect how many investors are getting into the market. Is this going to
affect the acceleration of debt and, thus, house prices? Steve: Yeah, it will. This is the classic
thing. We have regulators that don’t understand the dynamics I’ve just shown you because they’re
mainstream economics trained and their training tells them to ignore private debt. So they’re
not even seeing it coming. What they’re going to do now is a bit like they’re shutting the
door while the horse is vaulting. So the door’s going to hit the horse on the head. As well
as the deceleration finally clicking in and causing house price falls. The regulators
are going to make that happen more rapidly. So I expect them to panic at some stage and
reverse direction because they don’t want to see house prices fall. So these regulations
will encourage further deceleration of mortgage debt and cause the slump in house prices.
They’ll be blamed for it, but it’s really, the cause of the whole crisis was letting
the level of private get as high as it is right now to begin with. Ryan: Okay. So, in a perfect world, what would
have happened? Would have mortgage debt not have risen as much as it did? Steve: Yeah. I mean, Australia’s got all these
slots of encouragements people to get in and then speculate on housing. So, if negative
gearing, obviously, you don’t have that cost anywhere else in the world. You can write
off losses against income from a particular business, but you can’t write off losses from
a business against all your other activities, which is what a lot of negative gearing lets
people do. We have a capital gains tax that’s half the
level of income tax, which if this don’t work, gamble. Much better for you, much better for
the country. And then, we have the first home owners scheme, which gives people the depositors,
and when Rudd was doubling and tripling of the grant back in 2008. That effectively meant
people could have enough of deposit to go and buy a house just from the government money
alone, which of course encourages yet more mortgage debt. So all these things have been
encouragement of the market and the positive feedback between accelerating mortgage debt
and rising house prices had made it look like a good strategy, but the outcome of that is
that we’ve got this astronomical level of mortgage debt – the highest compared to GDP
in the OECD. And to maintain continued house price rises, we have to have that ratio continue
accelerating. Well, that’s not going to do it, at some point, when it stops doing it,
it could be well doing it right now, then house prices will fall because of the lack
of demand from this new accelerating new mortgage debt and we’ll see house prices coming down
and then the government will be in panic. Because, of course, they don’t want a house
price crash. But they’ve set it up that it’s inevitable, unless [inaudible 26:12] yet again. Ryan: Okay. So for us, as average investors,
what can we do to prepare for this potential downfall? Both if we own property, is there
ways to mitigate our risk versus if we’re thinking about getting into the market, how
can we assess this and whether or not we should get into market? What can we do to protect ourselves if and
when this happens? Steve: The only way to protect yourself from
this sort of thing is to reduce your leverage. That’s all. If this happens and you’re levered,
then you’re wiped out. If it happens and you’re sold out of the market or you’re not levered,
then if you still have properties, the fall doesn’t bankrupt you and you still have cash
flow. But if you’re levered and it goes down, then cactus. So the only individual thing
can do is to get out of debt. Ryan: Okay. So, basically, you’re saying if
you get out of debt or if you own your properties outright, if they go down in value, well,
you still own your properties. But if let’s say you have 100% mortgage on that property
– or let’s say 90%, you’ve got 10% deposit, if house prices do drop, 40% then you’re actually
in the rears by 30% of what the house used to be worth. Steve: Yeah, yeah. Ryan: Which could potentially lead to the
banks calling your loan and making you bankrupt, is that what you’re saying? Steve: That’s right. People think it’s only
going to happen if unemployment rises, you know. And they therefore say, well, as long
as the employment’s okay, there won’t be any problem. But the whole dynamics of credit,
drive, everything in the economy, including employment and this is what people don’t have
their heads around. I’m about to share my screen again when I get the graph up to show
the American data. Ryan: While you do that, can I ask you one
question? In America, when their house crashed – or across the world, when this has happened
in the past because it’s happened in other countries as well, what happened to rents
in those areas? Did they crash as well? I’m just thinking if people own positive cash
flow property that pays for their mortgage, if a crash happens, will their rents get reduced
and they’ll end up in the negative situation? Steve: They won’t fall as much as house prices
do. Rent’s really based on incomes, you know? That’s why rents don’t rise as much as prices
do in a bubble. They don’t fall as much in a slump. If people lose their jobs and you
therefore don’t have the same security of income from tenants, but house prices will
fall more than rents. Ryan: Okay. This makes so much sense to me
because let’s say I want to buy a house, if interest rates go down, I can afford to borrow
more and therefore, if the whole market’s doing that, that pushes prices up. But as
a renter, interest rates go down, it doesn’t affect how much I can pay to rent a property.
I’ve got an income that I earn, I divvy a portion of that to live and to pay rent and
so, yeah, I understand now why rents wouldn’t fluctuate and why they don’t fluctuate in
line with the property market and I’ve never understood that. Steve: I’m glad it helped. The catch that
people – yeah, sorry. Ryan: I was just going to say do we know how
much rents did drop in relation to house prices in previous crashes across the world? Or is
that just not a figure people really look at? Steve: It’s a figure I could derive, but it’s
not great deal. If you look at the house price crash in America, that was of the order of
40%. I think you would find rents might have fallen by 10%. That sort of thing. Ryan: That’s a massive difference. Steve: Massive difference, yeah. The reason
that people say that they’re okay as long as unemployment doesn’t rise, everything’s
going to be fine. Well, the relationship I’ve talked about between accelerating mortgage
debt and rising house prices is only part of the relationship for private debt. Because,
again, credit drives the economy. So, there’s a very strong relationship between credit
and the level of employment and this is shown in the American data right now. The red line is the change in private debt,
which is credit. The blue line is the unemployment rate. This is going back to 1990. I’m graphing
unemployment on one side and GDP on the other, obviously. And you can see that there’s a
strong negative relationship. It’s a ridiculously strong negative relationship, in fact. If
anybody knows their mathematics, the co-relation between those two series is -0.93. What it
says is when credit starts to fall, unemployment will rise and vice versa. So you see the lowest
level of unemployment for America, which is when it was down to about 4.5% back in 2007,
corresponded to credit being 15% of GDP. Then the GFC strikes and credit goes from +15%
to -6% of GDP. Unemployment goes from 4.5% to 10%. Ryan: Is this private debt or government debt
or both? Steve: This is private debt. Just private
debt. Government debt actually in the opposite direction. Government debt is a bit like an
air conditioning system in a hot house. As the hot temperature goes up, the air conditioning
turns on and cools the property down. That’s what government debt does, it operates in
the opposite direction. The driving force is private debt. Ryan: Yup. Is this just because people are
using debt to buy things which fuels the economy, which creates jobs? Steve: Yeah, exactly. So your total demand
– your own personal demand. If you go shopping, you can buy something either by using cash
you currently got in your bank account so you swipe your debit card or you go get the
Mastercard, you swipe the credit card. They’re both independent sources of demand. So your
total spending is what you spend with the money you earn, your cash flow plus change
in your debt and that aggregates to the national level. It’s important that you understand
that. Ryan: Yup. And then if I decide I’m going
to be frugal, not only am I no longer increasing my credit or using the Mastercard, I’m now
taking my personal money and using it to pay down debt rather than to spend on things,
which just leads to lower economic activity. Steve: Exactly, yeah. That’s what happened
in America and most of the world. Ryan: This may be a stupid question, but why
do we care about unemployment rate and what effect does that have on the property market
in terms of house prices or in terms of rental prices? Steve: Well, as soon as people start losing
their jobs, and they are, the property market will fall over before people start losing
their jobs. This is the causal mechanism actually typically goes from property prices to unemployment
in that sense. As the property bubble starts to deflate, because mortgage debt starts to
decelerate, that means there’s less demand in the economy because people aren’t taking
out mortgages and, therefore, not spending into the economy so there’s less money. In
fact, money is being destroyed once people start paying their mortgage debt off. And
with that, there’s less economic activity, there’s more unemployment. So the causal mechanism
actually starts effectively with the ending of the property bubble. And then, that will
cause rising unemployment, which underwrites everybody’s belief that our property prices
will remain high as long as unemployment remains low. The falling property prices are a signal
that unemployment’s about to rise, which undermines the whole argument. Ryan: Okay. So you’re saying that falling
property prices precedes growing unemployment. Steve: Yup. Yup. Ryan: Okay. I guess my question now is in
terms of when will all this sort of stuff happen? Steve: Yeah. I think it’s starting to happen
right now because the total demand that we get in the economy, that is the sum of household
borrowing and corporate borrowing and Australia’s been on a whole series of waves of borrowing
since 2010. Because we had both household borrowing to buy property, obviously. But
also, corporations borrowing to invest in the mining boom. And the combination of the
two meant that the change in credit in Australian went from something on the order of $50 billion
a year back in 2010 to $250 billion a year now. Now, of course you can tell that the property
bubble is to some extent still continuing, people are still borrowing money to buy housing.
But people have stopped borrowing money to build mines. That’s fallen over completely.
And now, you’re getting a plunging in corporate borrowing. In fact, corporations are starting
to re-pay their debt. So that means, one of those two sources of credit is disappearing.
It doesn’t matter where the borrowed money dollar comes from, in effect once it’s in
the economy because it’s disappearing from the corporate sector, there’s less demand
turning up in the Australian economy in general. And that will mean that demand for houses
gets affected by that as well. Ryan: So you’re saying that that’s already
happening, like that decrease in corporate borrowing, the companies are paying back their
debt. That is already starting to cause decrease economic activity which will affect house
prices. Steve: Yeah. Yeah. It’ll feed back into the
system and then people will be less willing to take on mortgage debt. For a start, nobody
in the mining region of Australia is borrowing money to buy a house right now. Ryan: Yeah. Steve: Okay? That’s gone. That’s why we’re
seeing massive house prices falls in Queensland and in Western Australia. It’s only in Sydney
and Melbourne you’re still seeing a continuation of that, but because now there’s less people
buying and mining rigs and importing trucks from overseas and so on with borrowed money,
because there’s less of that, we’re starting to see a slow down in credit growth for the
corporate sector in general and it will turn negative. The corporate sector will start
paying off its debt as it did back in 2008. And then, that’ll take the wind out of the
sails before you have the slow down from mortgage debt, but that’s also starting to happen,
too, by the looks of things. So the combination of two plunge in credit, we’re going to see
a downturn. Ryan: So is there any way to stop this? Is
there anything that the government or lending institutions can do to stop this from happening
or push it further into the future? Steve: Well, the Reserve Bank cuts rates by
another 2%, which it’s got the capacity to do, that could suck – Ryan: Does that make it down to 0% interest? Steve: Not for borrowers. That’s the rate
that the bank reserve charges other banks to borrow money from it. So the private margin
gets added on top of that, so if the reserve rate is 2%, then you’ll likely to find the
mortgage rates for about 5%. Whereas, if the reserve rate falls to 0%, then mortgage rates
might fall to 3%. That could encourage people to get back into it. Falling mortgage prices,
never been a better time to buy yada, yada, yada… People could dive back into the market
again and continue borrowing. But, of course, we’re approaching a level where the Reserve
Bank hits 0% interest rates. Now, once it gets there, there’s no way that it can do
that again. Ryan: Well, yeah, it can’t go lower than 0%,
or can it? I’ve heard stuff about – I don’t really understand it – but, like, negative
interest rates in other countries. Is that something that the reserve bank could do? Steve: They can and it’s insanely stupid. Ryan: And why is that? Steve: Because you have to think about this
in double-entry bookkeeping terms. Ryan: Okay. I don’t know if I’m going to be
able to understand those terms. Steve: Economists do not think in terms of
double-entry, which is a big mistake. But I do, which is why I’ve got some of the different
approaches that I’m talking about now. But if you think of double-entry bookkeeping terms,
you’ve got assets and liabilities. And your loans are an asset for a bank. And so are
your reserve accounts you have at the central bank. Now, at the moment, the central bank
pays you no interest on the reserves, so you’ve got an income earning asset, which is your
loans and a non-income asset, which is your reserves. Now, when the central bank says
they’re going to change negative interest rates, what that means is, they start giving
banks a negative return on the deposits the banks have at the central bank. So the banks
now have got 2 assets. Loans earning a positive return and reserves earning a negative return.
So what’s the banks’ response that is going to say, well, we’ve got a negative return
from one asset. The only way to compensate is to get a positive return from the other
asset or a bigger one. So if we get negative rates on our reserves, let’s increase our
mortgage rates and that’s what’s happened in Switzerland. Now, the reason conventional economists didn’t
see that is they don’t think in double-entry bookkeeping terms. And they tend to think,
well, if we make the reserve rates negative, then banks will pass it on to depositors and
they will pay a lower rate deposits and that will stimulate people because they’ll be getting
a negative rate on the deposits, that will stimulate people to spend. And, therefore,
even more spending and the economy grows. And that is total bullshit because any bank
that actually starts – if a private bank passes on the negative rates that it’s getting for
its reserves on the depositors, depositor will say, “Give me my money, thanks. I want
it in cash.” Ryan: Well, that’s the thing. Say, I’ve got
$10,000 in the bank and I’m getting paid by the bank for it 3% or 2.5% or whatever they’re
giving at the moment. And say, in the future, that that becomes negative and I’ve got $10,000
in and they’re charging me 1% or it’s -1%. Of course, I would rather take that money
out, keep it in the sock under my bed than leave it in the bank. So, I understand why
they wouldn’t want to do that. Steve: That’s what the economist and all these
central banks, their mind is infected with neo-classical economics, which is the main
reason I’m fighting all this stuff, the nonsense theory of capitalism. With that thinking,
they actually believe that people would be encouraged to spend by the negative rate rather
than take the money out of the bank. Ryan: And just keep it. It seems like such
logic, though. Like, just put yourself in that position. If you had X-amount of dollars
in the bank. Just because you’re getting a negative interest rate, doesn’t mean you’re
automatically going to spend that money. You might just take it out. Steve: I know. Yeah, take it out of the bank,
which you’ve got the option to as having cash. You can go to the bank and say, “I don’t want
to deposit anymore, thanks. I want to hang on to my savings in cash.” Because banks themselves
are realistic enough to know that, when the banks – the central bank makes the policy
change to send a negative rate. The private bank looks at it and think, “Well, there’s
2 ways we can cope here. We can actually charge our own depositors and that’ll make them stampede
to the other banks. Or, we can charge extra money to our borrowers, put up mortgage rates.
They can’t get away.” And that’s what happened in Switzerland. When they made the rate -0.5%
mortgage rates were increased by 0.5%. Ryan: Yeah. So it actually has the opposite
effect to what they were hoping for. Steve: Yup. Ryan: So interest rates could potentially,
from the Reserve Bank, go down to 0%. Is that the only thing that could continue to stimulate
house prices from going up and how long will that extend things for, like 2 years, 10 years,
what are we talking? Steve: That’s maximum 2 years. Because the
reserve’s always been totally dragging its chain on interest rates because it’s always
believed that the biggest danger facing the economy is inflation. So the Reserve Bank
was the very last bank to stop raising rates when the global financial crisis hit. And
the very first central bank to start raising them after it in the false belief that it
was all over and all behind us and didn’t really happen in Australia anyway. So they
have always been making things worse rather than better. And that’s what I think they’re
going to do this time again. Ryan: Okay. Cool. We might close it off there
to respect your time. I guess, what I’ve taken away from this is that – and you can correct
me if I’ve had any mistakes here – but that the acceleration of increasing mortgage debt
is a major of the growth of property in this country. As that growth decreases in terms
of acceleration, so it’s not growing as fast, then that is going to affect house prices.
What can be done to avoid house prices dropping as that occurs is the Reserve Bank could drop
interest rates to continue that acceleration, but then eventually, we’re going to hit a
point where that continuation can’t occur anymore. Mortgages will stagnate, which will
lead to house prices crashing. Did I kind of catch that? Steve: You pretty much nailed it, yup. Ryan: And then how do you work out that house
prices are going to drop like people say 40% or 50% or 80% in some areas? How do we get
those figures? Steve: That’s really, in some ways, working
from experience what happened when other bubbles burst. It varies from country to country,
obviously, how far it will go. America’s prices fell 40% before they started to recover. Japan
prices down over 70%. England prices fell and rose again, which can happen because acceleration
is quite a weird bee, so mortgage debt is still falling, but house prices are rising,
the acceleration’s actually positive in England. So it isn’t a given, but compared to other
bubbles around the world, the only bubble that compares to ours in the past is the Japanese
bubble. I don’t see us having that big of a fall, but I see 40% as being modest in terms
of thinking of how far it could fall. Again, the one wildcard here is Chinese buying. And
as soon as there are problems with house prices, I can see the Australian government reversing
its current attempt to stop overseas purchases and encourage them back again if it keeps
house prices rising. So I can see them doing that. Ryan: Okay. I guess there’s more at play here
than just mortgage rates of Australians. We’ve also got to take global economy into effect
and other countries like China investing in Australia. Steve: And politics in China. Because if the
Chinese continue to want to get their money out because they’re afraid of a collapse in
their economy and the crack down by the communist party, then we can get flooded with money.
If the communist party cracks down successfully, people could be forced to sell their properties
over here. So the final gamble people are making is what’s going to happen in China.
That’s a pretty big gamble. Ryan: That is a pretty big gamble. We’re talking
about another country’s government making a decision that could affect our property
prices here in Australia. Steve: Yeah, that’s right. Ryan: Okay. Wow, I’ve learned a lot from this.
I really appreciate you for your time and taking the time to share your knowledge with
the audience and I’m sure a lot of people will be enlightened and will want to look
into this in more detail. Where can they go to get more information whether it be from
you or are there sources that you recommend that people can go to learn more about this
or to keep tabs on things like the accelerating mortgage debt and that sort of stuff? Steve: Okay. I’ve got a blog site called
I also publish a column in Forbes magazine. I do it fairly irregularly because I’m too
damn busy. So those are 2 possible sources from me. The best source to look at to compare
data internationally is the Bank of International Settlements, which publishes 2 databases.
One on lending, including government as well as private debt across 41 countries. And the
other being house prices across about 50 countries. So that’s the best comparative data source
you can find. Ryan: Is that available to the public? Steve: Yeah. It’s freely downloadable. You
go to Bank of International Settlements and just search. Very quickly, you’ll find what
they call total credits of the private sector. And that’s a huge, huge database. Very, very
comprehensive database they just put together in the last year. Ryan: Do you think if I went to read that,
I would understand what I’m looking at? Or, will it be a bunch of mumbo jumbo? Steve: The trouble is the database, it’s a
spreadsheet. If you download the spreadsheet with about 1200 rows and about 250 columns.
So I’m analyzing that for a book I’m writing right now, which will be coming out in September.
I’ve got a few articles about that on my blog in the meantime and that will give the analysis
of the whole thing. Ryan: Okay. So, I would probably say the best
place people can get information will be to go your blog and to get your analysis of it.
And so, what was the address of the blog again? Steve: Ryan: Okay, cool. I will get people to go
ahead and check that out. Thank you so much for the time. I wish you the best with your
book launch in September. I just really want to thank you that you’re willing to stick
your neck out there and say something so controversial and something that is against what most banks
or most governments, most people would want you to say. I applaud you for your willingness
to do that. Steve: And I applaud you for listening. It’s
unusual that property blog would do that. Ryan: So I hope that you enjoyed that episode
with Steve Keen, who is an Australian economist currently living and working in London. He
knows this issue like nobody else. His ideas are controversial in the market, not everybody
agrees with him. For me, the book isn’t closed on this subject. I think that Steve makes
some great cases. I think that the data that he provides is very convincing. It was very
hard to understand at first, but once I began to understand it, very convincing that, yes,
property prices have been going up as a result of increased mortgage debt and that as this
slows down, then that could cause a property crash. So that’s definitely something that I am more
aware of now after talking with Steve and I hope that you are, too. And this is something
that I’ll be exploring. I’m going to try and get some more experts on to talk about this
in more detail so we can understand everything that’s happening, but this is definitely something
that I will take into consideration when investing in the future. I’m not saying that, yes, I 100% agree that
the property bubble is going to crash, that I wouldn’t invest in property, but I am saying
this is definitely a possibility that you need to consider when investing in property.
Because if you’re investing in negatively geared properties hoping for capital growth
forever and day, that might not happen. And what if Steve’s right? What if in a few years,
the market does crash and you’ve invested in negatively geared properties for capital
growth and all of a sudden, you’ve got a property that is worth less than what you paid for
it and you have to pay every single month because the property is negatively geared.
It kind of reinforces what I’ve been talking about for years, anyway, which is one of the
benefits of positive cash flow property is that you can continue to make money in whatever
market. Steve talked about how rents don’t change
as much when there’s a massive property crash. Yes, they do decrease, but unlikely as much,
because rents are more directly correlated with the income, rather than with how much
people can borrow. So that was exciting to hear for me talking about positive cash flow
properties for all these years because if we are preparing for this situation, if the
property market does crash or does go down, whether a burst and we’re losing 40%-50% in
a very short period of time, or maybe it stagnates or maybe it drops slightly. If we got positive
cash flow property that is generating us income, hey, at least we can afford to pay our mortgage
and hopefully we’re still making a profit on top of that as well. Whereas people who
are solely reliant on capital growth won’t be in as good a position. So, positive cash flow, at the moment now
when everything is growing, everyone kind of puts positive cash flow to the side and
says, “Well, that’s not really a viable strategy. I can make $100,000 in a year by investing
in the growth market that just happened in Sydney.” And they’re right. Look, if you can
consistently get those sorts of capital growth, then good on you. But there is a risk associated
with it. And so, look, I really appreciate Steve for
basically sticking his neck out and speaking out against government. Speaking out against
banks. Speaking out against lenders and all of this sort of stuff because chances are,
not many governments or institutions are probably liking what he’s saying and liking that he’s
calling them out on this sort of stuff and making them seriously look at it. So, definitely,
I applaud you, Steve, for your courage in that. I hope that this has been interesting for
you, guys, and that you have learnt something along the way. And this is something I will
discuss more and more. If you have questions, please head over to the blog at
That’s where this episode will be located. There’s a comment section down the bottom.
If you scroll down there, you can ask your questions there and I’ll try my best to get
back to everyone and see if I can answer these questions. But, yes, this is something I’ll
be exploring more into the future and thanks again to Steve for sharing your knowledge
and for sharing your time to enlighten and to educate the On Property community. So, that’s it for today, guys. Until next
time, stay positive.


  • Broke Mike

    i agree with him on a lot of things and i'm keen to read his book.
    But the bouble popped in 2010 when iron ore popped.

  • bernard clarke

    They don't like what Steeve is saying is because the bastards all have a vested interest.So they all try and kick the can down the road once again.

  • screwge84

    This has been really interesting and informative about what can affect the economy and subsequently how it can affect housing prices. Although it's one man's views, it's certainly something to consider and Steve clearly has a lot of knowledge. A lot of facts are there which are hard to ignore. Current Australian housing prices are simply not sustainable without the significant investment we're receiving from overseas (China). One interesting thing for me is understanding the security of rental income which won't take such a massive battering compared to regular housing prices.

    Great interview and thanks for asking the questions us laymans can understand 🙂

    PS: may I also suggest adding Steven's name and link to his blog in your video description.

  • Mike McDaniels

    Is demand from the orientals pushing the prices up? Like they are on the north west coast of the USA?

  • John Smith

    Look at REA share price increase

    Im going to take a short position in this and Mcgrath real estate.

  • Carris Yiu

    The wild card that could stop/delay the property bubble from bursting as Steve had mentioned is the Chinese's spending in Australia. It would be good to get an expert to talk about this area just to have a full coverage on this subject.

  • Jay D

    Another reason the gov must keep prices elevated is because they may become insolvent without the totally exorbitant stamp duty fees. The country pulls in 350-650m per MONTH on stamp duty. Stamp duty is a tax buyers must pay to purchase a property in Australia. The other reason they must keep property prices high is because of their own portfolios.

    I also read recently the short sales on the big four banks has hit 9 billion which is just below the GFC level. (Don't recommend shorting banks!)

    Settlement issues are starting to rear its head in the apartment market.

  • Gort Newton

    Domestic house prices in the two leading cities Sydney and Melbourne is driven by massive quantities of black money arriving from mainland China. In Melbourne, the only city where figures are available, in 2014, 52% of domestic housing stock was bought by mainland Chinese. Sydney figures are much higher.

  • Jeffie Jeff's Art

    We are in a bubble too over in Vancouver Canada. All Chinese foreign investors buying up all our properties.

  • Alan Hughes

    Bricks and mortar you will never loose maybe it will go down a little but always goes back up in Australia, been this way for 30 years as the population has gone up.Even if the economy goes belly up bricks and mortar will always be king.

  • Ned's Head

    housing and real estate in Australia are totally corrupted, our real economy has been hijacked by the international hyenas and replaced with a fake economy built around fake house prices and fake interest rates. it's all smoke and mirrors

  • Anthony Pillari

    His causation between increasing debt and property prices makes sense to a limit. I can see how increase debt will signal increased prices but there is a ceiling after which the correlation doesn't stand up. At 100%, at this point banks cannot artificially increase prices by loosening of policy, the only way prices could increase is by demand. So then the argument that debt is a precursor to prices falls over and it is in fact prices that truly is driving debt. I know we are not at 100% lending but as a theory this makes my question the foundational soundness.

    Also isn't tying gdp with any price indicator going to signal price drops. Three quarters of negative gdp growth signals an economy has entered recession. Any signal that signals recession (real or self for filling ) is going to signal a down turn in pricing, no He's able to explain away why we bucked this trend with good economic management (first home owners grant) but surely it's not mind blowing to say if Australia's GDP

  • We're All Ruled By The Greed Of A Few

    Everything Steve is saying is correct. In Western Australia here housing price is falling real fast. Especially the Pilbara. I just moved back from Rockhampton and everything there is either dropping in price and heaps of ppl getting laid off. Like here in Perth. This fiat currency and debt economy is mathematically proven to reset. If the countries around the world didn't have China buying property everywhere. The whole economy would be buggered. You watch the yuan will be the next world currency. And we'll all be owned by China. We need to take a leaf from Iceland's book and run the bankers over and take the power back.

  • Charles Nelson

    If you're going to do a podcast on this subject do it so that we can see and understand it. Otherwise your incompetence on this technical level will be used to discredit your judgement on the subject.

  • wazza33racer

    Australias property bubble is feeding off record low interest rates and China's massive credit bubble. Hot capital is flowing into Australia looking for yield, and the Australian property market is the main benefactor. However, we need to also think about other recent factors. Europe is dying economically and now is in the midst of a full blown Islamic invasion, civil war is inevitable. People will begin to flee Europe if they have money and Australia/New Zealand will look like a very suitable alternative. Same goes for the US, it is facing significant social and economic problems. People and money will continue to come here looking for safety and stability. All these factors will likely keep Australian property ticking over despite rotten fundamentals for average Aussie's. Lets face it, food inflation etc is making life hard going for average people and having an affordable place to live is a struggle.

  • Rodrigo Dutra

    The best way to buy a home is saving money. Run away from banks and credit cards, do not pay interest, buy with cash and demand a discount on full payment. I am a Realtor and always point out to my clients to do so. Who buys land, not wrong !!!

  • Chris K

    they might be able to kick the can down the road with lower rates at the expense of retirees earning peanuts on their self funded pensions! the problems no one seems to talk about

  • SpaceWalkTraveller

    This is the so called expert who said Australia property was going to explode after the GFC in 2008. Ask Steve about the bet he lost with Rory Robertson. Steve had to walk from Canberra to the top of Mt Kosciuszko wearing a T shirt that said "I was hopelessy wrong on house prices! Ask me how." Academics live with their heads in the clouds. How do you come up with the word expert with his track record? I remember everyone saying after the GFC that house prices were going to crash in Australia, thank God I looked at the facts and new they were wrong. I brought a lot of properties back then and cleaned up. I just paid my house off.

  • baits

    the government is cashing in on stamp duty and council rates , so they don,t want house prices to fall . it will crash if interest rates go up . every one is investing in houses , next generation has no hope of buying a home and the government don,t care.

  • James D

    I think an important difference to keep in mind is that in the US if you default on your loan, you lose your house the lender takes it and you no longer have any debt.

    In Australia if you default on you loan – your house is sold and if there is a difference you still owe that money.

    This creates a mentality in Australians to not sell one's house for less than they paid.

    Additionally although I do agree that house prices in Aus are expensive – i don't think there is a "bubble" (with the exception of Sydney which I think possibly may be in a bubble but then again its a global Alpha+ city so a premium price can be commanded), all you need to do is compare average house prices in capital cities to average household incomes. The last statistic I saw said typical Australian house costs 5.6 times the median annual household income, and that statistic also averages in Sydney which admittedly is high at 12 x the median household income. But then again you will also earn more money if you work in Sydney too so it's all relative.

    All in all I think if you are buying anywhere in the country (except for Sydney) you've got nothing to worry about in terms of house prices crashing.

  • Ragnar6000

    there are suburbs in Aus were the average income take home pay of 30k a year….and these houses are selling for over 500k
    its insane……the numbers just don't stack up!

  • Susan Hoddinott

    You need to also talk about LAND TAX.  You can be positively geared and even totally without debt and the Government ca still impose an artificial value on your property, tax you on this and take your property away if you don't pay.

  • Andrew

    In Canada, Toronto and Vancouver are dealing with a housing bubble also. We have had extremely low Interest rates since 2008 and an influx of foreign investments.

  • Alejandro Williams

    Thank you for this interview. I've subscribed to the channel.
    A suggestion for the next time you have signal problems, you might want to take the videos out, thus freeing bandwith for audio signal. You can use some placeholder image instead, or only show the interviewee and graphics. This sometimes eliminates the annoying sound distortions. Cheers!

  • Daniel Stapler

    I like what Steve Keen says about economics. But high housing prices have a lot of supporters.
    1) The federal government does well when prices are maintained and face being voted out if they fall significantly. every once in a while they publicly wring their hands over the issue of housing affordablilty but they don't really want house prices to come down. If they do drop they boost things with a home owners grant.
    2) state governments get a lot of revenue from houses and also benefit with a good house market politically and also issue first home grants
    3) Local councils like to make it hard to build medium and high density houses, because that's their thing
    4) Banks are very vulnerable if the value of their mortgage book falls, they can maintain things in crisis by cutting loans to developers and maintaining credit to buyers. They have a lot to lose if prices go down.
    5) real Estate agents and the media like to spruik things up also
    6) Overseas buyers are also supporting the market
    7) Negative gearing is basically a tax subsidy that amongst other things means it is not as expensive to build an apartment and leave it empty. By leaving it empty it helps to maintain the cost of rents.
    These factors make a property price crash less likely but if does happen it will more serious.

  • parkerbohnn

    The whole problem is the Chinese. Like in America sane people stop
    buying homes when the price rises and they can't afford them. Problem is
    the local residents in Australia just like in Vancouver have copied
    what the Chinese do (keep paying more and more, knowing eventually
    you'll lose all your money when the entire thing implodes like any
    bubble) and will suffer the consequences down the road when everyone
    rushes to sell all at the same time. So they need to freeze out the
    Chinese and do something so the first time buyers are less able to buy a
    house. This will prevent the first time buyer from going bankrupt by
    paying too much and it will let prices of homes fall to normal levels.

  • David Pavlovski

    If property prices start falling they will drop interest rate immediately, we have three dimensional economy, housing, mining and importing rich people. Only one creates anything!

  • MrBMWF30

    Very good video, agree with most of the views however don't think crash is starting in Australia anytime soon. Although agree it might be kicking the can down the road strategy but this also means opportunities for the "riders"

  • Kaushik C

    Pretty informative. Steve Keen is one of the few voices of reason in this market driven by greed and impulse instead of data and political economic relations.

  • jammy jackson

    I think the Australia housing is
    under value
    1 we have a fat fat welfare payments
    2 the country is SAFE
    3 clean air
    4 it's close to Philippines Thailand
    ( hot hot frendly girls and gurlz )

  • elmer fudd

    LOL Steve Keen after being wrong for 10 years he says he is really right.
    Give it away Steve you have no credibility at all.

  • tom tesoro

    NOW IN 2018, Steve's predictions have been proved correct! In the battle between KEEN vs Property spruikers.. Spruikers won!

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