Bloxham's possible correct conclusion based on wrong theory

Comments on Paul Bloxham “The Australian housing bubble furphy”, 18/03/2011, http://www.businessspectator.com.au/bs.nsf/Article/Australian-property-prices-housing-bubble-pd20110317-F24WP?OpenDocument&src=rot


Paul Bloxham's use of the less than two decades data to justify his theory is a bit over reach, or over stretch.

In the late 1990's, many people were used to the theory of new valuation for the dot com tech companies. But that didn't prevent the market fallout in 2000 or thereabouts.

Before the recent global financial crisis, many people, including many financial genius, thought probably new paradigms of finance. But we just have had the Great Recession, not to mention the near death (collapse) of global banking and finance industry.

However, I think Paul might have had a point right even though his theory is wrong. Australia is different from the US and many other European countries. It is related to international geography, populations and immigration as well as relative external and internal demand and supply.

It has small population with a large land and located in Asia where people density is so high and populaitons are so large. Any demand from Asians for Australian houses and land can potentially sustain an otherwise serious housing bubble.

Therefore, the effects of external demand for Australian housing market can cause serious dislocation of house valuation, because for many Asians, it may be relatively cheaper to have houses with land that is so scarce in their home lands.

So, I think Paul has a wrong theory, wrong diagnose, but a possibly correct conclusion.

That itself is an irony, but it often happens to the so called experts. And it is not very unusual after all. I would give a mark of 50% to Bloxham's work.