The first home Buyers Strike announced by tax reform group Prosper Australia last week is being supported by debt-skeptic Steve Keen.

“This is an excellent idea which I endorse,” Keen said on his website (1) yesterday. “It would be a foolish personal decision to take out the size of loan now required to enter the market.”

Keen is Associate Professor of Economics and Finance at University of Western Sydney.  His solid work and stern warnings on the unsustainable level of consumer debt are very highly regarded overseas and by academic economists.

Keen identifies as post-Keynesian, critical of both modern neoclassical economics and Marxian economics. He has repeatedly spoken out about the dangerous instability of the Australian housing market, describing it as a ‘Ponzi Scheme’, as defined by Hyman Minsky.

“Though the banks have the most responsibility for driving up house prices by letting their LVRs rise from the responsible 70 per cent levels of the 1960s-1970s to the utterly irresponsible 97 per cent levels of today, the house price bubble has also been inflated by the so-called “First Home Owners Grant” scheme. This scheme, which I prefer to call the First Home Vendors Grant, has been used as a cheap macroeconomic boost by the government on five occasions now –1983, 1989, 2000, 2001 and 2008 – and each time all it has done is push up house prices,” Keen said.

“There are good odds that house prices will start to fall this year – with macroeconomic impacts flowing from that – and there may well be lobbying to bring back the FHVB for a sixth time. This campaign might well make that an impossibility, which would be a very good thing,” Keen said.

Prosper Buyers Strike campaigner David Collyer welcomed Prof. Keen’s support of the Buyers Strike.  Keen adds his voice to hundreds registering their dismay on the GetUp campaign ideas page (2), where the Buyers Strike has risen from one hundredth to sixth in the rankings in a mere ten days.

“Young adults face a genuine dilemma. If they buy a home at current prices, they commit to an entire lifetime of heavy debt repayments.  Standing aside to save for a higher deposit is sensible and logical.  Meanwhile they are denied the citizenship benefits of home ownership,” Collyer said. “Do not underestimate the anger and frustration of an entire generation of Australians.”

Collyer reiterated that Prosper does not announce the bursting of The Great Australian Land Bubble, but does regard it as ‘imminent’. ENDS