Australian properties are hugely over-valued at the moment.
Just compare to similar cities in Europe or the US. You can buy a 500 square meter spec house on a quarter acre with breathtaking water view that is walking distance from the city center and a short drive to the ski-slopes in Seattle or Vancouver for just over $1.2m Australian. Seattle and Vancouver are beautiful cities - Vancouver is widely regarded as the best city in the world to live in, and two of the worlds richest (Gates and Dell) chose Seattle to live in along with host of other super-rich that can live anywhere they want - so I guess that is pretty good too! Don't believe me - look up the real estate on the internet.
In Perth you will get a war service home on 400 square meters (one eigth acre) on a busy road miles inland and 20km from the city, 4000km from ski-slopes for $1.2m. Don't believe me - look up the real estate on the internet!
In Sydney - for $1.2m you will get a cardboard box (twin shared of course) you are allowed to sleep in until 6AM at which time the street sweeper will kick you awake.
In the outskirts of Paris you will get a nice 4x2 house 15km out of town for about $900K.
New York is pricey close in - but only a few km from Manhattan Island the prices drop drastically and you can get a nice place for under a million - and this is the worlds premier city!
Once the mining boom slows down and as the Aust dollar rises you will find that the foreign money bouying our property market will leave town.
I think 30% is being optimistic martis. Inner areas may only be hit 20% (from prices today - that may be 40% down from prices in a couple of years). There will be carnage in less sexy areas like the middle and outer suburbs of the cities that have more than tripled in value over the past five years. I would think a 50% or greater fall in those prices. The problem with property is that once it is in a downward trend there is no quick way to get out at the start - because no-one wants to buy. No such thing as a stop-loss on property!
Look at the US to see what can happen once the speculative investors get out of property and interest rates go up. Some properties that have been re-possessed that were bought for $500K just two years ago are now being passed in at under $100K. This is what underlies the extent of the sub-prime losses.
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