This research house with research to sell joins a long list of headline grabbers with the "housing to dive" line. On a scale of predicted pain, 10 per cent isn't nearly as much as some and it's supposed to come after a couple of years of flat prices.

Flat housing prices wouldn't be a bad thing for a market that has indeed been running hot and a correction of 10 per cent is not out of the question for the parts of the market that have run particularly hot.

But there's a problem with the reported Capital Economics reasoning: it assumes the Reserve Bank is particularly stupid, the Australian Prudential Regulation Authority (APRA) is asleep at the wheel, the banks have learned nothing from being rapped over the knuckles over home loans and that there is a different set of household debt figures around to the ones the RBA publishes.

Capital Economics' Paul Dales thinks the trigger for housing prices falling will be the RBA putting up interest rates "although that trigger won't be pulled until 2018 at the earliest". He believes that, because of the high level of household debt, interest payments are taking up a large proportion of household income even though interest rates are at record lows.

For first home buyers, interest payments are indeed considerable. For the average household, they're not, as the accompanying RBA graph shows.

The percentage of average household disposable income being spent servicing the record debt is actually the lowest it's been in more than a dozen years. And the displayed interest rate level is prior to the latest rate cut.

"When rates rise, that burden will grow and may be too much to bear for those borrowers without funds saved in offset mortgage accounts," Mr Dales said.

That's probably why APRA has been pushing banks to include a couple of hundred points of cushioning in assessing the ability to service loans.

It also assumes the RBA is so silly as to not realise there's a high level of debt and, therefore, that only a small amount of monetary tightening will be necessary to cool the economy when, at some distant-but-longed-for-point, it's running too hot again.

And the thing about an economy running hot is that it means a low level of unemployment and a high level of jobs growth, which means a low chance of mortgage default.

"The 40 per cent of borrowers with interest-only (IO) loans are particularly vulnerable if rates are much higher when they have to start repaying the principal," Mr Dales also said.

Funny thing about that – APRA found that the much-maligned interest-only borrowers actually tended to have better equity (when including the popular offset accounts) than the principle-and-interest brigade.

And if you think a little more about it, most of the interest-only loans presently out there were written when rates were higher. What's more, APRA has pressured banks to charge more for IO borrowings, so the chances of there being sudden rate shock when the average IO loan is due for review in a couple of years isn't that big.

To further quote Mr Dales: "A high share of those loans are probably held by domestic and foreign investors too, who are more likely to sell or default in the bad times."

"Probably" is a rather vague term, never mind the apparent confusion in that sentence – I'd think all those loans are held by domestic and foreign investors. I can't think of another category.

The funny thing about the recent discovery that some foreign borrowers had made dodgy applications was that they nonetheless had better repayment and equity records.

Never mind. "Housing crash" still makes a great headline.