Treasury secretary John Fraser says there is “unequivocally” a bubble, in Sydney anyway.
Glenn Stevens hasn’t quite used the B-word, but he has said the prices some properties are fetching in large cities are “crazy”.
Now the investment community is singling out new evidence as the clearest proof yet that Australia’s east coast capital city house prices are entrenched in bubble territory: Google trends.
Google analytics shows a sharp rise in Australians Googling the term “housing bubble” this year.
A similar spike was recorded in the US in 2006, before the GFC seized lending and home values dived, leading to mass foreclosures.
Source: Google Trends
Back in the old days, you could track the weight of the Saturday paper and the number of pages and advertising in the property section as a gauge of demand for property.
Social media trends have upped the ante and created significant business opportunities for data trackers.
As the Wall Street Journal reports, Florida’s iSentium and several other “sentiment analysis” start-ups are trying to make predictions about the movements of stocks and other securities and derivatives using online data.
iSentium LLC, which analyses a million tweets from traders, investors and market commentators to try to find out whether sentiment for a particular stock is generally high or low, already has some banks, hedge-fund firms and high-frequency traders signed up for its daily indicator, at a cost of $US15,000 per month per stock symbol.
Elsewhere, Franklin Templeton Inc. has hosted a session on social media titled: “Is it Signal or Noise? Determining Sentiment and Identifying Trends”, as it looks at ways to improve decision making.
The arguments for and against justification of Australia’s property values rage on, with the OECD weighing in with a warning Australia’s residential property markets are at risk of a “sharp correction,” bond investor PIMCO describing Australians as “irrationally exuberant,” and the Reserve Bank showing Australia’s households debt has hit a record 155.9 per cent of disposable income.
The ‘fors’ of course focus on increased affordability for offshore buyers with the Australian dollar at six-year lows, a 2 per cent cash rate, contained unemployment – at least officially – and supply constraints in high-demand areas.
Whichever camp wins out, the Google search engine trends clearly expose Australians as being increasingly suspicious that prices really are finally overdone.