Reuters reports on the comparison of international housing bubbles. "For anxious investors wondering whether the U.S. economy risks being seriously wounded by a housing market downturn, Australia's experience of the past three years holds a potentially valuable lesson."

"If anything, the Australian boom was far bigger than that in the U.S., with average house prices doubling between 1996 and 2003. Four interest rate increases over 2002 and 2003 took the wind out of housing, but the resulting slowdown was remarkably modest by historical standards."

"Mike Buchanan and Michael Vaknin, economists at Goldman Sachs..looking at the experience of Australia and the U.K., concluded that, while they were relevant for the U.S., the wrong lessons were being learned. They argued that a downturn in housing would have a far greater impact on U.S. consumption than in Australia since American consumers had largely used equity withdrawn from their homes to fund spending."

"While Australians had withdrawn just as much equity as Americans, equal to about 10 percent of disposable income, they spent far less of it."

"Just as importantly, Australia's housing market peaked right as the country began to benefit from the global commodity boom. What it gets for its exports compared with what it pays for imports, has climbed over 30 percent since 2002. That was the biggest rise in half a century and has percolated right through the economy."

"Company profits have surged. Since more than half of adult Australians own shares, that has been a boon for personal wealth and cushioned the blow from a flat housing market."

"Clearly the same could not be said of the United States, the world's largest net consumer of energy. There, a string of budget deficits had lifted the U.S. national debt to $8.5 trillion, 13 times Australia's annual economic output."

"'The global commodity boom came just as the housing market was tipping over and saved Australia from a likely recession,' said Su-Lin Ong, senior economist at RBC Capital Markets. 'What will save the U.S. as their housing market turns? Consumers are in debt up to their eyeballs and fiscal policy is maxed out,' she warned."

The International Herald Tribune. "Red-hot property stocks in Germany might be headed for the deep freeze. A rush of private equity funds into German real estate, adds up to a bubble, according to the money manager Heiko Bienek. 'The more a wave is rising, the more dramatically it will break,' said Biene.'The first U.S. private equity funds who were the main drivers of the property boom in Germany are looking for the exit.'"

"'The recent real estate spending spree of private equity investors was based on too much fantasy,' said Robert Mazzuoli, an analyst with Landesbank-Rheinland-Pfalz in Mainz, Germany. 'Now it seems companies like Fortress want to cash out as fast as possible.'"

"Share prices have begun to decline. Colonia shares are down 35 percent from their high spot for the past year, Adler is 43 percent lower and Franconofurt is 41 percent lower. 'The big hype is over,' said Matthias Born of Allianz's Deutscher Investment Trust in Frankfurt."