Hi menta .. you have the story pretty right ... buuuttt
Everyone seems to have forgotten that even in the dying days of the Howard Govt that immigration (and hence the DEMAND for housing) was heading north at a rapid rate.
Since Globalisation everything, our one domestic industry that provides max job and multiplier effect of $$$$ spent is the Construction Industry.
It was no coincidence that Rudd & Co poured $billions of stimulus into school halls etc ...
Rudd also embraced the 'big Australia' (+300,000 immigrants p.a.) coz it meant DEMAND for housing and the flow-on which creates jobs et al.
A sharp increase in Migration translates into economic stimulus.
Too bad Labor worked out too late that 'big Australia' is really a ponzi scheme with our cities now log-jammed due to lack of major infrastructure (transport,medical,education etc) needed for the million plus new arrivals on Labor's watch.
The reason housing prices are moderating now is coz DEMAND is moderating as the Govt reduces immigration back towards 140,000 and Gen Y now back with M&D trying to actually SAVE a deposit coz Banks (feeling over-exposed) have actually tightened the lending a tad ...
Economics never was a science (despite Phd's arguing the diff) and Steve Keen was sort of right but didn't take into consideration the Aussie habit of hanging onto 'the house' at all costs in a downturn/unemployment ... even if yer not eating that regular.
Soooo ... unlike share investors who liquidate at the drop-of-a-hat ... property owners/investors tend to ride out the troughs and hang in for the long haul.
The truth is the Australia's house prices are way TOO HIGH (whatever happened to 3x earnings) ... but the Govt and the Industry/Banks et al are making such a $mozza that no one is going to blink.
The RBA has always operated in a 'bubble' of it's own and history shows us that the RBA hikes too soon and always eventually too high .. and is always lowers too late and never low enough.
And as has been said ... the RBA is a market follower and always will be.
