housing finance annual rate weakest in 13 yrs, page-72

I appreciate there are many different factors which impact property prices or any markets for that matter. The important matter though is what weighting you attribute to each factor. I think you underestimate the de-leveraging process we are currently in, and what impact this will have on all asset prices. Sure some areas are more attractive than others, but i would venture to suggest this was already built into prices over the past decades boom. It's a bit like saying Woolworths is a well run company, but does that mean i'll pay a 30 PE heading into a prolonged economic slowdown - i would say probably not (definitely not). As long as people have used debt to finance properties in these more attractive areas, and any new potential buyers also require debt then these areas will not be spared.

I suggest you read the following paper (web link) written by Steve Keen a pre-eminent economist. He is a real economist who looks at real fundamentals, unlike our marketing/conflict of interest variety of economist such as Shane Oliver of AMP or Craig James of Commsec. I am not quite as bearish as him, but the fundamentals are irrefutable. Have a look at the last chart that shows the magnitude of the current credit cycle in comparison to previous cycles, and how there is no turning back once the de-leveraging process kicks in. Once the negative feedback loop has ignited, the cycle of falling asset prices causing defaults on debt causing banks to lend less causing economic distress causing further falling assets prices causing futher defaults on debt etc etc etc is brutal and will not run its course until all excessive debt is flushed from the system. Of course asset prices will be bought down with it

http://www.debtdeflation.com/blogs/2008/08/04/how-much-worse-can-it-get/#comments

I am not scare mongering i am just giving a long term fundamental analysis of the current economic situation. Dont believe anyone who tells you it's different this time!!