Jonathan Tepper, a UK based economist and founder of research house Variant Perception, is convinced Australia is in the midst of "one of the biggest housing bubbles in history". 

The Australian Financial Review reports about how he and local hedge fund manager John Hempton scoped out the apparent epicenter of this bubble, Sydney's western suburbs, and walked away thinking it was even worse than they'd originally thought. It's a fascinating story. 

In a subsequent report to clients, obtained by Fairfax Media, Tepper outlines his views with a host of data.

"The Australian housing bubble could not have become as ridiculous as it is without the help of easy financing," he writes. 

Over the past few years, over 40 per cent of all new mortgages originated have been interest-only mortgages.

"This is truly Ponzi financing, where home buyers only make money if their houses keep rising in value," he writes, later describing interest only loans as a "disaster waiting to happen."

epper likens negative gearing - the ability to claim losses on leveraged investment properties as a tax deduction - to startups during the dot com bubble burning through their cash. 

"Only in a bubble could losing money on housing be viewed as positive," he writes. 

House prices keep going up.

And up.

But almost everything else - wages, GDP, and rental income, else remains relatively stagnant. 

Except for debt, of course 

"It is very difficult for a foreigner to understand just how crazy the Australian housing bubble is." he writes.  

"You have to be there to observe the mania first hand.

Australia is the only country we know of where middle-class houses are auctioned like paintings."