Earlier this year, after sending a team of economists to Australia, the IMF produced their latest Country Report on Australia, giving the country a clean bill of health. They appear to have simply used or endorsed the Reserve Bank of Australia's Dwelling prices and Household Income ratios and charts. But these charts are wrong. The RBA argues that when making international comparisons in dwelling prices to income ratios, the median income that most countries use is not well suited for Australia due to lack of up-to-date surveys, and therefore the average measure is more appropriate. It appears that the IMF has bought into this argument and also mixed up the median measure (which the RBA has at about 7 times income) with the average measure (which the RBA has at about 4 times income) and then compared Australia's average ratio with the rest of the world's median ratios. This is hiding Australia's true housing bubble. The IMF has also failed to understand the unsustainable dynamics at work in Australia's economy, which is due to the high net migration policy adopted after 2003 to contain the risk of a crash in house prices after a huge run-up in prices and credit from 2000 to 2003 (after the Sydney Olympics). It seemed to work so the government just kept on bringing in more migrants (first 100K, then 200K then 300K per year). High population growth has fuelled high GDP growth, high wages growth and very high household debt growth. The Australian Bureau of Statistics has just released an alarming update on household debt (4102.2 Australian Social Trends 2014). Total household debt in Australia now stands at $1.84 trillion or $79.000 per person; total household debt to gross household disposable income is 180%. But these ratios are misleading because Australia, similar to Spain before 2008, has been systematically raising real wages to internationally uncompetitive levels so that in absolute terms household debt levels are now about double that of households in Canada, UK, Germany and even the US. Recently the reserve banks of Germany and Austria reported that house prices in their countries were now overvalued. In contrast the Reserve Bank of Australia reports consistently maintain that house prices and household debt are not too high. And apparently the IMF sees nothing wrong either. As Paul Krugman writes in his book End This Depression Now: "once debt levels are high enough, anything can trigger the Minsky moment - a run-of-the-mill recession, the popping of a housing bubble, and so on". So if the IMF is trying to avoid causing any panic, then their reports need to be viewed as uninformative at best.