IMF lost its way on Australian housing market!

Comments on “House prices to stay overvalued: IMF report”, see BusinessSpectators, 16/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/Overvalued-house-prices-likely-to-stay-C76J5?OpenDocument&src=hp2

Grant Colbran has made a very good point.

Indeed how did the two poor IMF guys get the figure of 120% growth of Australian house price in the last 20 years? They obviously did not understand the Australian housing market.

While they are correct in saying the strong population growth and high values of terms of trade provide support for the overvalued house market, they have not identified and studied the effects of Australia's geographical location and the impact of other Asian countries on the Australian housing market.

They are important factors, because Australia is a western country with a small population located in the East Asia region, with stable democracy and freedom, and high income, large land and lots of nice beaches. The Japanese bought properties in the 70s and 80s. Now the Chinese are buying properties in Australia.

A small number of people in those big countries can mean a big impact on the Asutralian house market!

Anyone ignores these factors run the risk of getting his analysis wrong.

The IMF has lost its way, just as the Rudd government did as claimed by the current PM!

What to do with IMF as opposed to a PM, not much at the moment it seems.