When I finished yesterday’s post I realised there was plenty else that could have been said.
First, of course, is the way that the Reserve Bank’s housing graphic feeds a narrative that a fall in house prices would itself be a bad thing, at an economywide level. After all, presumably their mental model is symmetrical.
As I noted yesterday, their framing totally ignores the context in which house prices change. Were a government ever to summon up the intestinal fortitude to free up land use, we would expect to see house/land prices fall, and fall a long way. This would, of course, be tough for some individuals, but their losses would be largely offset by gains to others (the young, the poor, the renters), and for many people – owner-occupiers with modest or no mortgages – it would really make no difference at all. Speaking personally, I would cheer the…
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Utopia, you are standing in it! 
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