As expected, the Reserve Bank has increased official interest rates again by 0.25 per cent. It seems safe to predict that, unless the housing bubble turns rapidly to a bust, there will be two more instalments in the New Year, bringing interest rates back to a ‘neutral’ position with a real rate for borrowers of around 5 per cent.

These prospects and the collapse of leveraged-investment promoter Henry Kaye should be enough to end the boom in house and unit prices. The question is, can current prices be sustained in the absence of prospects for capital gains, or the fear of being left behind by a rising market, and in a situation where renting is so much cheaper than buying.

I’m a notorious Cassandra on such matters, so feel free to ignore my prediction that Sydney prices are set to fall by 30 or 40 per cent, with less dramatic, but still substantial, falls in other capital cities.