Playing With Bubbles – Part 2: Rodrigue, and a Closer Look at the Australian Housing Market

Well, in keeping with Part 1, I said I would post more trends if I found them.

My acquaintance “Gim” at the TalkFinance Forum has come through with the goods again.

Upon my casual request, he willingly came through to show trends of Australian state house prices with time.

And the results are indeed interesting.

I post them below and leave you to decide if you think the trends are at least roughly fitting the Rodrigue Bubble Psychology Chart, posted in Part 1 (but also posted again below for your convenience).

Rodrigue Bubble Psychology

For the Australian charts, below, please note the following:

1) “HPI” refers to “Housing Price Index”

2) BOTH the HPI and Housing Finance are plotted TOGETHER on the charts, against time – to show their individual trends with time, but together such that some sort of comparison can be made.

In particular, it is interesting to notice that the HPI tracks the Finance (debt) trend, but just lags it slightly in time – interesting, don’t you think? Would it be a fair or even strong case to suggest that, from this data, Property Prices are strongly dependent on Housing Finance; and that even Housing Finance increases CAUSE Housing Price increases (and similarly for decreases?).

Personally, combined with other perspectives, I think this is a strong case.

Anyhow, onto the charts!

Interesting similarities with the Rodrigue Bubble Psychology Chart, don’t you think? Or perhaps i’m being too leading with my questions? 😉

Enjoy.

Regards,
Stewart

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2 Responses to Playing With Bubbles – Part 2: Rodrigue, and a Closer Look at the Australian Housing Market

  1. Pingback: Debt and House Prices - Page 3

  2. Pingback: Aussie Officials and The Aussie Housing Bubble (“not”) « Angles on Economics

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