The FHOG boost merely lured the most marginal borrowers into the housing market at the worst possible time - near the all-time peak in house prices (which is shown to be mid-2010 with demand & prices falling ever since). The boost brought forward demand which created a demand vacuum.
Housing finance figures have recently fallen to a record low (since records began some 30 years ago). It was the debt fueled investment mania that drove house prices ever higher over recent decades. And while people go mad in crowds, they only recover their senses slowly.
We are moving from a supposed housing shortage (as the property spruikers and misinformed economists would have us believe) to a housing over-supply. There are still currently more than 300,000 house on the market for sale in Australia - coupled with less buyers willing to borrow and less bankers willing to lend. The mania, like every mania throughout history, has finally come to an end.
And with the RBA having further to cut interest rates than other nations central banks simply means that our market has further to fall than those nations (as the RBA follows the market down by slashing rates over coming years). So I agree sharedawealth, if you're looking to buy a home nearer the low you're best to wait quite a few years yet. Because this historic credit/housing bubble will take years to deflate (as per Keen's long-term comparison charts).
