I am astounded by Tanya Plibersek's recent blog "Great News for Home Buyers and the Economy".

What is this government thinking throwing our money away trying to keep house prices high?

The global house price bubble is clearly deflating rapidly. The delusion that there has not been enough building is world wide. The delusion that giving people 21k to keep house prices high will help has the potential to make matters far worse.

There is no more a shortage of houses than a shortage of cars or shares. Where is the first car owner's grant?

The overbuilding during the bubble has become obvious in the US now that prices have started falling and speculative demand has disappeared. See this example of cognitive dissonance from a Californian department of housing report just this month: "The California Association of Realtors reported August 2008’s median price of an existing, single-family detached home in California was $350,140 representing a 40.5% percent decrease over August 2007’s median price of $588,670.11 The disparity between housing production and need has resulted in double-digit year-to-year percentage increases in the median price over recent years."So, prices up proves a shortage, prices down, exacerbates the shortage. Everywhere.

There are more examples from this and other countries here: "A world wide housing shortage" on Bubblepedia.net.au. In the UK and US as their prices have deflated, the houses have come pouring onto the market, and everyone has forgotten about the housing shortage story.

The excess building in Australia during the real estate bubble is simply astounding [follow this link]. It is easy to find in the census, but the government finds it easier to get its information from HIA and REIA press releases / sales packs.

Think folks about the empty new buildings near you. Think about why they "can't" sell them. Ask yourself if government should try to trick first homebuyers into borrowing to make the same mistake as the gamblers who built or bought them expecting to be able to sell them for more than twice what they are worth as income producing assets. Delaying the inevitable collapse of the bubble and trying to push the problem onto a whole new round of greater fools will only make the problem bigger.

For a dose of sanity, have a look at Bubblepedia.net.au and www.whocrashedtheeconomy.com. Think for yourself, and don't accept the mistakes of other people. Ignore the government's attempts to induce you to borrow to pay off a house price gambler.

Numbers are good when trying to work this out. The following charts show that if it is different here at all, it is only because it is bigger:

I'll leave you with a thought:

"We also must work in close partnership to dispel the myth that our nation is experiencing a ‘housing bubble.’ .. we as a country still face a housing shortage." (Senator Mel Martinez, secretary for US Housing and Urban Development 2003)

How did that work out?

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Daniel Cox is a forty year old anaesthetist with four children. He works in both public and private practice in Wollongong and Sydney. As Daniel explains it himself, "The choice not to own a house while irrational prices make it so disadvantageous to do so has sparked a great interest in financial manias and human folly. I set up the geowiki bubblepedia.net.au in the hope that the few who have recognised the madness might help others to avoid being harmed by it."