Australia's economic recovery will probably not be derailed by a slump in the housing market.
But you never know.
Most likely, 2011 will turn out to be the third year of steady recovery from the global financial crisis (GFC) that caused the economy to stagger backwards for just a single quarter in late 2008.
Or will it?
It is all too easy to forget a key lesson from the crisis that came to a head in late 2008.
Financial and economic catastrophes always seem inevitable in retrospect but rarely before they happen.
It was the same lesson taught by the bursting of the South Sea bubble in 1720, the panic of 1873, the October 1987 share market crash and the collapse of the "dot com" boom in 2000, and any number of financial crises through the ages.
Sure, there are always a few who "picked it", but they are always in the minority.
And there are oh so many ways that things might go wrong.
China's commercial property market might slump, like Australia's did in the late 1980s, succumbing to years of incremental tightening of monetary conditions.
Further afield, financial turmoil currently afflicting debt-burdened Ireland could spread through Europe, plunging the world's financial markets into GFC Mark II.
Or maybe GFC Mark I isn't over yet.
More aftershocks could emerge with the US economy slowing and putting downwards pressure on share prices in New York, which still sets the tone for equities worldwide.
And global equity markets are a key driver of economic activity in Australia.
The sabre-rattling on the Korean peninsula could escalate into all-out war.
And why not? It's happened before.
The list could go on.
Where potential disasters are concerned, imagination is the only limiting factor.
But it does not take much imagination to see what could happen if Australia's housing market goes into a tailspin.
There are few domestic industries not intimately bound up with the housing market - transport, retailing, manufacturing, you name it.
Perhaps the most important is the finance sector.
In October, according to Reserve Bank of Australia (RBA) data, there was $1,968 billion, or $1.968 trillion, of credit outstanding in Australia.
Of that, $1,148 billion - well over half - comprised housing loans.
As the sub-prime crisis in the US showed with crystal clarity, banking systems and slumping property markets can make an explosive combination.
The view in official circles is best typified by a comment by the RBA in September.
"Despite being more indebted, households' debt servicing ability is currently strong, supported by ongoing income growth," the RBA said in its half-yearly review of the finance system.
There are two potential flies in the ointment here.
One is housing prices and the other is the income growth referred to by the RBA.
There has been a lot of discussion about prices recently.
Some argue there is a "bubble".
Prominent among them are Steve Keen, associate professor of economics and finance and the University of Western Sydney, and a prominent figure in the funds management game, Jeremy Grantham, co-founder of pioneering "strategic asset allocation" investment firm GMO.
In a nutshell their view is that housing prices can be driven above their historical norms by borrowing, creating a bubble that can only be sustained as long as debt continues to rise.
And both prices and debt levels are well above their long-run averages as a proportion of household income.
Accordingly, back in July, Grantham described Australia as having an "un-popped housing bubble".
Such analysis generally sees a popping of the bubble as only a matter of time.
Of course there are plenty arguing that there is no bubble, pointing to scarcity of housing and cramped cities, rather than speculation, as the driver of prices.
Shortly before Christmas, the Housing Industry Association of Australia's senior economist, Andrew Harvey, argued that "in the longer term Australia's housing market is underpinned by the immutable forces of insufficient supply and robust underlying demand".
Westpac's economists published a report in October titled "Australia Housing: The Bubble Myth", which argued along similar lines.
What's more, comparing house prices to incomes as a gauge of fair value is an odd way to measure the value of a financial asset.
A financial analyst attempting to value shares or bonds in this way in a presentation to a client would generate, at best, embarrassed snickers.
But more rational means of valuing housing also suggest overvaluation.
Real Estate Institute of Australia (REIA) data suggest rental yields - rents, net of estimated costs but before income tax, as a percentage of price - are averaging only a little over three per cent in the capital cities.
For the major centres of Sydney and Melbourne yields average around 2.5 per cent.
At those rental yields it is difficult to come up with a plausible outlook for prices and rents that could justify investing in housing.
That's if investors are hoping for the kind of returns had in recent decades - in double digits per year in much of the 1980s and 1990s and early 2000s.
Either rents and prices must rise to unaffordable levels or, if rents are to stay affordable, prices must rise even faster.
And if prices rise faster than rents, yields will fall even further, making investment on the expectation of big returns even less rational than it is now.
Two International Monetary Fund economists, Patrizia Tumbarello and Shengzu Wang, recently weighed into the debate, publishing a working paper in December asking "What Drives House Prices in Australia?"
Their statistical analysis was a comfort to anyone hoping for vindication of a decision to buy, but the problem of unusually high prices and low yields remained.
Their econometric analysis suggested an overvaluation of five to 10 per cent.
But based on trends in price-to-rent ratios (the simple inverse of rental yields), their analyses showed Australian housing prices were 16.5 per cent above the norm.
But that was based on the average for the past 10 years, when prices were already high and yields were already low.
Based on the REIA's yield data, housing prices would have to fall by 25 per cent to pull rental yields back up into line with even the modest 4.3 per cent average of the past two decades.
So the argument that housing prices are expensive has merit, whether or not they got that way through normal forces of supply and demand or a crazy, debt-fuelled buying binge.
Which means that, at some point, there could be an adjustment.
And that adjustment could be prompted by one of those unlikely-but-still-plausible catastrophes listed earlier.
Catastrophes undermine income, the demand side of the equation that gives comfort to the proponents of the no-bubble thesis.
But because those events are unlikely, it means a slump in housing prices is also unlikely.
2011 will turn out to be one of those normal years of economic growth and rising prosperity.
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