Working Papers

Fundamentals of Australian House Price Inflation

There is a lot of ill-informed offshore commentary about Australian house price inflation, with anecdotal reports suggesting that some hedge funds are putting on trades designed to capitalise on what they see as an inevitable Australian house price bust.

We have heard all this before from a local debate about house prices that goes back to at least 2003 and substantially predates international interest in this issue since 2007. In 2005, Robert Shiller declared that Australia had suffered a burst housing bubble the previous year, a proposition that has become even more laughable with the passage of time.

Chris Joye reviews the latest data in his presentation for offshore investors.

posted on 02 September 2010 by skirchner in Economics, Financial Markets, House Prices

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Oh please.  That’s not analysis, that’s reassurance for jittery offshore investors.

On page 12 he argues that Australian housing has underperformed, but on page 52 (where he’s arguing the case that China has underperformed) he shows a chart with Australian house prices leading the world.

Chris is very late to the China housing story.  He seems to have realised only very recently that a China housing bust threatens his Australian-housing-will-boom-forever narrative.  All of his China housing market talking points have been very effectively countered by the likes of Chanos, who unlike Joye, is betting big that it will turn bad.

As for laughable predictions Stephen, lets not forget those clangers from your good self about the health of the US economy circa 2006-2007.  Shiller may have been dead wrong (so far) about Australian housing, but he was dead-right about US housing.

Posted by .(JavaScript must be enabled to view this email address)  on  09/04  at  07:35 AM

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