Housing Bubble Week: Speculation and Unchartered Waters -- Chris Joye
Chris Joye manages $3 billion as the Co-Chief Investment Officer at Australian fixed-income manager Coolabah Capital Investments, and is a contributing editor with The Australian Financial Review.
He also has a long familiarity with the Australian housing market. In 2003, then-Director of the Menzies Research Centre Malcolm Turnbull commissioned Chris, fresh out of Cambridge University, to be the principal author of the 380-page Prime Minister's Home Ownership Task Force Report.
In this conversation, Joe asks Chris why he paradoxically believes Australia’s housing market is a bubble that likely won’t crash. They also discuss the importance of investor expectations, and how the extent of national price falls may be larger than 15%, peak-to-trough, if these animal spirits are allowed to become too pessimistic.
Money Talks debate: Chris Joye vs. John Adams
‘Are Home Prices the Next “Bubble”?’, 2004 New York Fed article by Jonathan McCarthy and Richard W. Peach
‘Why We Should Be Worried About Australia’s Housing Market’, Chris Joye’s 2013 article in the AFR
‘A Model of the Australian Housing Market’, 2019 paper by Trent Saunders and Peter Tulip
You can find Alex Joiner’s chart indexing house prices to incomes and interest rates in this write-up of the Joye-Adams debate
Does Chris think the RBA was complicit in blowing a huge housing bubble? [5:34]
What does Chris think is the likely extent of falls in Australian house prices? [9:26]
Chris believes the Australian housing market is facing an ‘orderly correction’. [16:27]
How does Chris define ‘bubble’? [19:55]
The centrality of speculation and why Joe is reluctant to rely on Joiner’s analysis. [27:56]
Responsible lending. [42:24]
Differences and similarities between the Irish and Australian housing bubbles. [45:31]
The wealth effect. [50:35]
Investor expectations can precipitate big changes in house prices. [52:21]
Why Chris may have underestimated his house prices falls if Labor comes to power. [59:46]
The unique characteristics of housing markets that generate inefficiency and downward price rigidity. [1:02:22]