Shewee Cochiu Blogs and Reviews

Nouriel Roubini is seeing signs that we are “entering bubble territory” in nearly a score of developed and emerging markets countries that he warns “looks like a slow-motion replay of the last housing-market train wreck.”

In a Nov. 29 opinion piece appearing on Project Syndicate, the NYU professor and economist says the signs of “frothiness” include fast-rising home prices, high and rising price-to-income ratios and high levels of mortgage debt as a share of household debt. Aided in the developed countries by very low short- and long-term interest rates, and considering their slow GDP growth, low inflation and high unemployment, “the wall of liquidity generated by conventional and unconventional monetary easing is driving up asset prices, starting with home prices.”

In the developed world, Roubini sees the beginning of bubbles in Europe (Switzerland, Sweden, Norway, Finland, France, Germany and at least in London in the U.K.) in North America (Canada) and in Australia and New Zealand. Bubbles are appearing in EM countries (though he says the “situation is more varied”) in those countries: Hong Kong, Singapore, China, and Israel and in major cities in Turkey, India, Indonesia and Brazil.

“With central banks…wary of using policy rates to fight bubbles,” Roubini’s biggest worry is that the standard tools applied by regulators—what he calls “macro-prudential” regulation and supervision of the financial system to address frothy housing markets—will prove “inadequate to control housing bubbles.”

Roubini did not discuss the U.S. housing market, but two reports last week showed that the domestic market is certainly improving. Building permits for future U.S. home construction rose 6.2% in October to 1.03 million units, beating economists’ consensus expectations and reaching the highest level since June 2008. The S&P/Case Shiller composite housing price index of 20 metropolitan areas increased 13.3% in September over September 2012, the strongest single-month gain in the index since February 2006.

Robert Shiller himself has expressed some concerns over the housing market worldwide. In an interview published this weekend in the German magazine Der Spiegel, he expressed worries over the price of real estate markets in several Brazilian cities, though in another interview, in Barron’s this weekend, he did not see any bubble in the U.S. housing market.

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Roubini agrees on the need for “macro-prudential” regulation, in which regulators decree “lower loan-to-value ratios, stricter mortgage-underwriting standards, limits on second-home financing, higher counter-cyclical capital buffers for mortgage lending, higher permanent capital charges for mortgages, and restrictions on the use of pension funds for down payments on home purchases.” However, because of the internal political criticism that such regulation will “take away the punch bowl of liquidity” from those housing markets, the regulation is “modest,” he says, and therefore “the political economy of housing finance limits regulators’ ability to do the right thing.”

HOLD the paint brushes - your old 1970s wallpaper or 1950s bathroom may well be a selling point when it comes to putting your house on the market.

Do a search under ''retro'' in realestate.com.au and you will find dozens of agents highlighting original features from the 1950s, 60s and 70s in their marketing.

Adelaide interior design duo Cain Rumbelow and Markus Hamence say they get plenty of requests for makeovers with a retro influence.

''Retro style has a lot of colour, and a pop, mod feel to it - it's especially popular with young people and it's never really gone out of fashion,'' Mr. Hamence says.

''We're actually doing up a pool room in retro style for a client at the moment. We're having lots of fun creating furniture from recycled tin drums for it.''

Mr. Rumbelow advises anyone interested in buying and ''doing up'' a traditional 1950s to 70s home in retro style to start by having a good look at the furnishings already in place.

''Start by studying the paint colours, wallpaper and curtains. Curtains will probably be old and moth eaten so you'll want to replace them. But make a note of the textures and colours that have been used and try to replicate that.'' READ FULL TIPS AT PERTHNOW.COM.AU