Residential planning approvals fell another 6.6 per cent in May. No, this isn’t proof the housing bubble is over, but it hints broadly at that conclusion.

I try to warn friends of the impending crash.  They dismiss me as a Cassandra, or laugh it off.  Why should it change?  They are geared to the hilt, taking a gamble  on what they can see in the rear-view mirror.

They say prices will rise onward and upward or will stabilize.

Hmmm.  If they continue to rise relative to incomes, no one will be able to afford to buy a house, and will have to stop buying as the banks refuse to lend except with giant deposits.  If they simply stabilize, the speculators will sell to realize their gains, driving prices down.

The turn will come. No one knows when.

Steve Keen has a very scary graph comparing US, Japanese and Australian house prices for the last 25 years, as he amplifies Jeremy Grantham’s proposition:

“Bubbles have quite a few things in common but housing bubbles have a spectacular thing in common, and that is every one of them is considered unique and different.”

Why would Australia be an exception?

We can’t really claim land is scarce.  We have lots of space.  Lots.

It is desert sans coffee shops and boutiques.  It is dry and hot.

But look how much we have!

In the USA house prices have been falling for nearly five years, with no end in sight.

Can you see comfort in the ski jump at the end of the graph?  It merely shows the current price – in inflation-adjusted real terms – is still more than any price in the last twenty five years.  More and more US homeowners are foreclosed or give up and sell, their mortgages worth so much more than their homes that their position can never be retrieved.

Their position can never be retrieved.