Australia is IMF's whipping boy on housing risk

Economics The IMF wants to lead the charge against future housing shocks. But its efforts to change Australian policy are just misguided. Maximilian Walsh
On the issue of housing booms, Min Zhu, the deputy managing director of the International Monetary Fund, told a German audience earlier this month that the ratios of house prices to rents and incomes could provide an initial check on whether house prices were out of line with economic fundamentals.
That's hardly a controversial proposition. But the significance of the speech was not so much its content as its politics. The speech marked another concerted push by the IMF to exploit concerns about the interaction of housing and debt to carve out a more active role for the IMF in the global financial scene.
Reinforcing the IMF strategy, Min Zhu added blogging to his managing director's duties, declaring in his first contribution: "[The] era of benign neglect of house price booms is over". 
At the same time, the IMF launched a new website, Global Housing Watch, which readers were told would "bring together housing market information to keep track of boom and bust cycles and nudge policymakers to take early action to moderate housing booms".
The idea of the IMF giving a gentle nudge has a touch of Orwell. Perhaps I'm too sensitive. However, what initially attracted my attention to the IMF's policy-nudging ambitions in the first place was the high and unflattering profile Min Zhu accordedAustralia in the IMF press handouts.
Nominating the countries with the worst ratios of housing prices and rents to income he cited, in the following order, Australia, Belgium, Canada, Norway and Sweden.
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Max Walsh


Max Walsh was for many years one of Australia’s top economic and political commentators, highly regarded as a journalist, author and broadcaster. Throughout his career, Max was involved in all dimensions of the media industry, which has encompassed positions with two of Australia’s largest publishing companies and television networks.

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