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.

Show notes

Selected links

• Follow Chris: AFR | Twitter
• 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

Topics discussed

• 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. [1:02:20]