>The housing market in Australia is very overvalued, having been inflated artificially (in part due to negative gearing ... But in Australia you cannot tax-ded

>The housing market in Australia is very overvalued, having been inflated artificially (in part due to negative gearing ... But in Australia you cannot tax-deduct the interest on your own home, whereas in the US (IIRC) you can. I would expect the artificial inflation to be higher under the US system. The real causes of the high house prices IMO are: a) poor government policy, from federal to council level, the net effect of which is preventing the market to be adequately supplied with new housing; and b) a range of cultural factors (notably the image of housing as a safe investment, that is being cultivated with increasing desperation by the real estate industry) that results in channeling of investment into established housing.