It is the "B" word that few with their hands on the levers of Australia's economy have dared to publicly utter.
A fortnight ago Greg Medcraft, the usually reserved chairman of the Australian Securities and Investments Commission
(ASIC), went public with warnings about a housing "bubble" in Sydney and to a lesser extent Melbourne.
Mr Medcraft made headlines and raised eyebrows in an interview on the ABC where he became the first regulator to
openly warn of a property bubble.
"History has shown that often you don't know you're in a bubble until it's over but you can look at history and look at
historical averages and one can draw their own conclusions," Mr Medcraft told The World Today.
At the time, Mr Medcraft's comments about history's habit of repeating itself were criticised, with comments urging him to
produce the evidence.
Now the head of Treasury John Fraser has weighed in.
He not only warned of a bubble, but said there was unequivocal evidence that one existed.
Mr Fraser's unexpectedly blunt assessment at Senate Estimates took many observers by surprise.
"When you look at the housing price bubble evidence, it's unequivocally the case in Sydney. Unequivocally," Mr Fraser
"Frankly, whatever the data says, just casual observation can tell you it's the case."
Mr Fraser's straight talk on what could be a dangerous bubble gives some longawaited support indeed credibility to
warnings in recent months from top economists, property analysts and highly regarded observers in the business media.
Reserve Bank assistant governor Malcolm Edey remained cautious and did not use the Bword himself.
But he appeared to endorse the warnings of other experts, admitting the situation was at least "risky".
"A lot of people do think it's a bubble, serious people think that, and we agree that this is a situation where the market is
strong, it's overheated, it's a risky situation," Dr Edey told Senate estimates.
But now that Mr Fraser has jumped on the "bubble" bandwagon with Mr Medcraft, and Mr Edey is giving currency to the
warnings of his equals, the question is whether anyone is listening?
Mr Fraser's words in particular are likely to resound in the Reserve Bank boardroom as board members decide whether
the central bank will maintain an easing bias with a view to cutting the cash rate again as the economy continues to
The RBA is now between a rock and a hard place.
Many observers believe a further rate cut will be necessary to
stimulate the economy but at the same time, there are fears that would have the unintended consequence of fuelling
housing investment in the hot Sydney market.
The RBA is betting that moves by the prudential regulator Australian Prudential Regulation Authority (APRA) will be
enough to force banks to taper back their lending to investors, some of whom could be burned when interest rates
inevitably rise or values fall in a correction.
But the efforts to rein in lending appear to fly in the face of the evidence, with 86 per cent of properties on the Sydney
market sold at the weekend.
And it is a balance, as always, for Prime Minister Tony Abbott, stemming concerns of a "bubble", encouraging investment
and not seeking any perception that he is trying to influence the Reserve Bank which is independent to government.
"As someone who, along with the bank, owns the house in Sydney, I do hope that our housing prices are increasing," he
"I want housing to be affordable but nevertheless, I also want house prices to be modestly increasing."
It is a complex maze of challenges for the Government and the RBA.
But one suspects that regardless of the "bubble" warnings even from the likes of Mr Fraser and Mr Medcraft investors
will continue to bet blindly that real estate prices will keep rising.