Robert Shiller, one of the three winners of the 2013 Nobel Prize for Economics has warned that housing markets around the world are very bubbly

Robert Shiller, one of the three winners of the 2013 Nobel Prize for Economics has warned that housing markets around the world are very bubbly. An expert on market prices and asset pricing which led to his Nobel Prize, Shiller named Australia amongst a list of other countries where property markets have risen at a rapid pace this year. Shiller said when asset prices are getting way out of line it should be cause for alarm. The monetary authorities should lean against extreme asset price movements. He also mentioned that monetary policy was not enough to contain housing prices but also reflects a shift to a more speculative attitude. Central banks normally avoid targeting asset bubbles with blunt monetary policy for fear of harming the broader economy. However, the severity of the US housing crisis which caused the GFC has triggered broader thinking about asset bubbles. (VIEW LINK)