Catastrophic warning for Aussie economy (news.com.au)

An economist who predicted the Global Financial Crisis has sounded the alarm over a surge in large Australian mortgages, warning that skyrocketing household debt could trigger an economic slowdown.
The Australian-born Steve Keen, honorary professor at University College London, famously anticipated the subprime debacle in 2008 and has long criticised private debt levels in Western economies.
Prof Keen argues the new 5 per cent deposit scheme, where the government guarantees a first home buyer’s home loan so they can purchase with a lower deposit and without Lenders Mortgage Insurance, is yet another policy designed to keep Australia’s house price bubble inflated.

Across successive governments, home-buying incentives have become a “lazy way to stimulate the economy”, but the cycle is reaching its limits, he told news.com.au.
And the impact of the policies over time has been the exact opposite of what they claim to do - make homes more affordable.



The rest of the economy is stagnating under high energy costs, crushing businesses. This kills off jobs so that housing becomes even more unaffordable, except for rich immigrants that the present Government is letting in, or if you have multiple occupancy dwellings, that many poorer immigrants are up for. The housing bubble can be propped up for a lot longer as standards of living drastically fall.

[Posted at the SpookyWeather2 blog, October 21, 2025.]