Top Economist: This Is What "Always" Happens Before a Housing Market Crash
6/22/20269 min
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Top Economist Steve Keen exposes how “help-to-buy” style policies in Australia (and beyond) inflated house prices, enriched landlords, and pushed home ownership out of reach for younger generations. Using BIS data and Ravel demos, Steve shows why the real driver isn’t “shortage” — it’s mortgage debt growth and the political choice to treat housing as an asset class, not a basic need.
In this hard-hitting breakdown, you’ll discover:
✅ Why first-home buyer grants and LMI waivers pump prices instead of helping buyers
✅ How mortgage debt growth (and its acceleration) drives house prices in multiple countries
✅ Why the US subprime story is only mid-pack globally — and why Australia, Canada, NZ, UK went further
✅ The landlord windfall effect: policies that look helpful individually but are disastrous collectively
✅ Ownership reality check: outright owners down, mortgages and renters up since the late 1980s
✅ How “credit-based demand” props up GDP while trapping households in decades of debt
✅ Why politicians keep doing it — and what a price-down policy agenda would require
KEY INSIGHTS:
• Treating housing as an asset class has produced real house price rises of several multiples since the 1970s in most advanced economies.
• Rising mortgage debt causes rising house prices; the tightest links show up when you track changes in the change of mortgage debt.
• Australia repeatedly “saved” prices with grants and boosts, shifting credit cycles without fixing affordability.
• The result: fewer outright owners, more mortgaged households, more renters — and stagnation as income services debt instead of spending and investment.
This isn’t “supply and demand” on a whiteboard. It’s the math of bank-created credit meeting political incentives — and the bill landing on younger households.
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What’s your view — should governments target lower house prices rather than “help-to-buy” boosts? Add your thoughts below.
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Who is Dr. Steve Keen?
Dr. Steve Keen is an economist known for accounting-consistent, data-driven models that explain how bank money and private debt drive booms, busts, and asset bubbles. Creator of the Minsky and Ravel tools, he focuses on real-world dynamics instead of textbook myths — essential for engineers, finance professionals, and anyone who wants operational clarity over ideology.
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Clips
Transcript preview
First 90 secondsSteve Keen· Host0:00
Australia's property market is charging into 2026 with prices still on the rise, even as interest rate uncertainty hangs over buyers.
Speaker 2· Soundbite0:07
Prices in Australia are now rising at their fastest rate in four years, with Sydney, Brisbane, Adelaide and Perth hitting record high.
Steve Keen· Host0:15
This is one of the great weaknesses of Australia.
Speaker 30:18
Meet Steve Keen, world's leading economist who predicted the 2008 global financial crisis. Steve explains the problems Australian property market is facing.
Steve Keen· Host0:27
We treat it as if it's an, an investment rather than a consumption item, as we're being conned by the finance sector. And housing should not be an asset. Housing should not be something that you profit out of. It's something you should live in. Well, the Australian property market is basically an Australian obsession. If, if you... Conversation in Sydney always starts with, "How much has my house price risen since the last time we had dinner?" This is one of the great weaknesses of Australia, that it obsesses about the prices of real estate. Never mi- never mind the state of the manufacturing sector or the trade balance and so on. Are your house prices rising? It's been something which is a, it's a global phenomenon going right back to 1970, but we treat rising house prices as a sign of rising prosperity. Now, in fact, when you take a look at what drives house prices, and this is partly why I became notorious in the country back in the, uh, 2005 era, I say that what drives rising house prices is rising levels of mortgage debt. So what the rising house price actually tells you is there's an increasing amount of money being used to buy house prices, which is being borrowed from the, uh, banking sector, and that's what's primarily