MIAMI (Bloomberg) ? Jamie Westenhiser, Playboy Enterprises Inc.?s Playmate of the Month for May, says her disrobing days are over. With house prices in her home of Fort Lauderdale, Florida, up 105 percent in the past five years, the 23-year-old model told the magazine she?s embarking instead on a career in real estate.

US housing is at its least affordable in at least five years, according to a National Association of Realtors index that has tracked median home prices versus incomes since May 2000. Federal Reserve Chairman Alan Greenspan said last month he sees ?signs of froth in some local markets?.

That?s the Fed?s way of saying ?God help the US economy if consumers can?t rely on ever-higher property prices to boost their sense of economic well-being?. There?s plenty of historical evidence from around the world that housing-market bubbles don?t deflate, they burst.

Take Australia. In 2000, the average annual increase in house prices was 8.3 percent. A year later, that pace surged to more than 11 percent. In 2002 and 2003, Australians could count on their homes becoming at least 17 percent more valuable every quarter. The Australian central bank, though, started raising interest rates, pushing its key overnight rate half a point higher to 4.75 percent in 2002, to 5.25 percent by the end of 2003, and to 5.5 percent earlier this year.

As higher borrowing costs fed into mortgage payments, the housing market cooled off ? rapidly. Prices grew 12.6 percent in the second quarter of last year, 8.2 percent in the third, and 2.7 percent in the final three months of 2004. In the first quarter of this year, they rose just 0.4 percent.

It?s the UK, though, that provides the scariest horror story for what can happen when a supercharged housing market comes off the rails.

The average price of a London property almost doubled in the four years before the second quarter of 1989, climbing to ?97,667 ($172,900), according to figures compiled by the Nationwide Building Society, the US?s third-biggest mortgage lender. You would have almost quadrupled your money by buying in mid-1979, twice what you could have made in UK stocks during those ten years.

Across the whole of the UK, house prices enjoyed a similar though less dramatic surge, climbing to a bit more than ?62,000 by the middle of 1989, up from ?34,700 four years earlier and ?19,075 in 1979. The housing market looked increasingly like an accident waiting to happen.

By the end of 1992, that London property was worth less than ?67,000, according to the Nationwide figures, a drop of more than a third. Nationally, property prices slumped about 24 percent from the middle of 1989 to the end of 1992, leaving many people owing more to their mortgage lenders than their houses were worth.

Prices slumped as interest rates surged and people started to lose their jobs. From 1986 to 1990, the UK unemployment rate fell by half, reaching a low of 5.2 percent in April, 1990. It took less than two years to climb back near double figures, surging to 9.9 percent by December 1992.

The UK government, which was then responsible for monetary policy, had cranked its benchmark lending rate to 15 percent by October 1989 from as low as 7.5 percent in May 1988. Even by the middle of 1992, rates were as high as ten percent.

The ripple effects on the economy were severe. UK retail sales recorded average annual growth of 6.4 percent in 1988. As householders started to worry the good times couldn?t last, sales growth slumped to an average of two percent in 1989. In 1991, purchases declined in every month except November, posting an average fall of 1.4 percent. Retailers eked out a rally of just 0.8 percent in 1992.

A stock-market collapse in 1987 had helped inflate property prices. In October and November, the FT-SE 100 index of leading UK stocks plummeted, losing more than a third of its value in less than five weeks. Property started to look like a much safer place than the equity market to squirrel away retirement cash.

The parallels with the current US market are clear. The Nasdaq Composite Index lost half its value from March to December of 2000. That slump was followed by a wave of corporate scandals engulfing companies such as Enron Corp. and WorldCom Inc., which are still in the headlines today as the perpetrators roll through the judicial system on their way to prison.

So it?s tough to criticise US investors, or even Playboy bunnies, for preferring bricks-and-mortar financed by interest-only mortgages to the vagaries of the stock market. House prices rose an annual 12.5 percent in the first quarter of this year, according to the Office of Federal Housing Enterprise Oversight, after climbing 11.9 percent in the previous three months and by 13.4 percent in the third quarter of 2004.

In the 1990s, James Carville, a political consultant to President Bill Clinton, said he?d rather be reincarnated as the bond market than as pope or president because ?you can intimidate everybody?. These days, his afterlife profession of choice would probably be the global housing market.

?Bubbles are for bathtubs,? it says on http://www.condoflip.com, a website that exhorts investors to buy and sell condominiums even before they get built. Let?s hope US investors piling onto the housing bandwagon aren?t in for a hosing.

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