Imagine the impact negative equity would have on the car industry for example...
Take a look at the cars next to you on the freeway. Apart from the company-supplied vehicles and the minority on large salaries that can finance a luxury car... how many people saved and paid cash for the cars they are driving?
At a wild guess i'd say 70% is funded by positive home equity.
The problem is the government wants you to have a mortgage(hence the FHOG) because it keeps you in a job and it keeps you paying taxes and contributing. However, we now have an un-healthy reliance on property prices continuing to rise to prop up other parts of the economy such as the car industry.
