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Australian and Chinese housing bubbles to burst soon?

Comments on John Collett “Nightmare vision of impending property crash”, 13/02/2014, http://www.canberratimes.com.au/money/investing/nightmare-vision-of-impending--property-crash-20140213-32kl2.html

While Harry Dent may be right in claiming there are bubbles in both the Australian and Chinese housing markets, his prediction of nightmare crashes of the two markets are unlikely to be realised, especially in the short term, say this year or the next.
By international standards based on the OECD countries of average housing price to average household income, reports show that the ratio for Australia is high and much higher than that in the USA. If that is used as the definition of housing property market bubbles, then there is no doubt that there is a bubble in the Australia housing market.
Applying the same principle, there are housing bubbles in some big cities in China, particularly Beijing, Shanghai and possibly Guangzhou. However, China's situation is different and the degree of bubbles differs enormously across the country and it is unlikely there are significant bubbles in many smaller cities and towns.
Whether bubbles exist is one thing and whether they are bursting is another, even though the former is generally the condition for the latter to occur.
While China's central government has been talking about regulating and controlling the housing market particularly housing prices within China for many years, the effects so far are not particularly successful. Talking about regulating and controlling prices does not necessarily mean to push the housing prices down significantly, even though different people may have different interpretations.
Further, the Chinese government cannot afford a hard landing or crash on its housing sector that may cause significant negative effects on its economy which has been described as the main reason underpinning its governing legitimacy by some commentators.
The Australia case is different but it has its own unique circumstances to sustain the high price levels, mainly its market demand is not simply domestic residents alone. Australia is geographically located in or close to Asia where there can be many shortages but population. Australia is an immigration country and there are significant immigrants each and every year that support a growing housing market, particularly in its two largest cities, Sydney and Melbourne. But that is not so different from other countries such as the US and Canada. What is significantly different is that there are significant external factors of housing demand, because non-Australian residents can buy new properties in Australia and its geographic location closer to Asia further make it more attractive to Asian buyers.
Based on that factor, the criterion used for defining bubbles in a country is strictly not applicable in its crude form of the ratio of average price to average household income. The existence of strong external demand factors means that that ratio is bound to be high. This is because while the house prices may be high relative to its domestic income, external forces may sustain the higher housing prices. In the eyes of many overseas buyers, the housing prices are not that high, given that many overseas buyers are relatively rich and the housing prices in their own countries may be high due to much higher population densities that mean land is relatively more scarce when compared to Australia. This reasoning clearly applies to some Chinese buyers.
To conclude, Dent will likely be disappointed when his predicted bursting of bubbles in both the Australian and Chinese housing markets in this and next year does not come true.

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