Best Financial Markets Analysis Article I have a mate with some rental property in Sydney so when I saw Mike Shedlock’s piece on Australian property I sent her the link.

http://www.marketoracle.co.uk/Article16958.html

Today I saw another article that if I understood it correctly said “stand-down” the bubble popped in 2004”.

http://seekingalpha.com/article/192021-yes-australia-had-a-housing-bubble-too

I don’t know hardly anything about Australia or their house prices, I went there for ten days in 1988 and met a lot of very hospitable people, placed a bet on the Melbourne Cup and won, that’s about all I remember.

But I think I know a thing or two about bubbles, and although I suspect “Ironman at Political Calculation’s” analysis might be a bit of an over-simplification (you need really to know the number of housing units and take into account the cost of long-money to get to the “fundamental” (Other-Than-Market-Value in IVS speak), his chart is probably “good enough for government work”.

I showed where the line might go if “The General Theory” (of BubbleOmics) is as good as some of the other “General Theories”:

My point is that typically if you have a bubble you get an overshoot under the fundamental, and also bubbles don’t always pop in one go – (my view for example is that the S&P 500 popped in 2000 but it took until 2008 to get back to the equilibrium and 2009 to bottom).

So if that’s right then the bubble was from about 2001 to 2009 (eight years) so expect it to bottom perhaps in 2010 or 2011 and then get back to the “fundamental” (wherever that ends up) about 2017.

That’s of course if “The General Theory” is right:

http://seekingalpha.com/article/149741-the-seven-immutable-laws-of-bubbles

Although it’s worth noting that so far on Gold it appears to have been “before it’s time” (that’s a polite way to say….“wrong”), although it has had it’s moments.

By Andrew Butter

Twenty years doing market analysis and valuations for investors in the Middle East, USA, and Europe; currently writing a book about BubbleOmics. Andrew Butter is managing partner of ABMC, an investment advisory firm, based in Dubai ( hbutter@eim.ae ), that he setup in 1999, and is has been involved advising on large scale real estate investments, mainly in Dubai.

© 2010 Copyright Andrew Butter- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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