EVEN for an economist from New York with its fabled cost of living, prices in Australia's property market seem high.
"For an American, coming to visit in Australia, things are expensive, and property's expensive," economist Robert Gay said, as he walked around Brisbane's CBD on Monday.
"That doesn't mean it's a bubble," he added. It was only a bubble when banks become too lenient with lending standards and Australian banks did not have a history of being too lax, Dr Gay said.
But he warned that Australia's property was not impervious to a bubble emerging. Hot money could flow in when the Reserve Bank of Australia has normal monetary policies while other nations had extraordinarily low ones.
"Australia's vulnerable because it's a very attractive place," he says. "It's a natural lure for a lot of Asians who can't find (savings-investment) vehicles in their own country."
The comments from Dr Gay add to the debate over whether the local property market is overheating.
Dr Gay is now founding partner of consultancy Fenwick Partners, with a resume including stints at Morgan Stanley, Bankers Trust and as a senior economist with the Board of Governors of the Federal Reserve System in Washington. He had been brought in to Australia as a speaking guest for UBS Wealth Management.
Among US issues that could have ramifications for Australia, he talked about the US Federal Reserve and how it would need to cease its quantative easing program, a tactic likened to printing money by buying long-duration assets, by next year's end.
"They sooner the Federal Reserve gets started (stopping the program), the better off they'll be and the better off financial markets will be," he said.
Dr Gay said it might inflict some short term pain on equity markets, which have been buoyed by the program. But he said if the Federal Reserve could persuade markets that it was only "trump card" being removed, then "the sell-off would actually be a buying opportunity for anyone that has cash".