The argument that property can't fall in value here is quickly becoming a false defence.
The divergence of property values vs rent or rental yield I believe outlines the fact that there isn't a shortage of property. If there was a shortage of property the same pressure should be on rental prices - however this is just not the case.
And yes, there will be areas which are affected earlier (decrease in value) but as an area decreases in value the perceived value decreases in other areas over time.
And one final factor is this. While negative gearing has been a driving factor for property increases this will be the main factor in decreasing values in my opinion.
It takes time for 'investors' who speculate that property values will increase to pay for costs of ownership will realise or maybe just believe that the growth isn't there. This will make new investors and recent purchasers think that the investment may not be a good investment over the next few years and pull the pin.
Therefore negative gearing will amplify the increases and then the decreases. Interesting time ahead.
