"Google what caused the property collapse in the USA"
All the talk about the sub-prime cause usually neglects to discuss the important factors of serviceability and refinancing ability, it wasn't so much the loans that was the problem but the ability to service or refinance it. The market was going fine until the economy slowed, credit became harder to obtain, and price declining making it virtually impossible to refinance if you were experiencing or facing negative equity.
So in my view..
less or no income leads to low serviceability, forces a sale, a forced sales cause prices to drop, a drop in prices leads to more selling (specs and non long-term 'get out first' mentality. If they are quick and on the ball they could start the 'get out' earlier when they foresee declines in income/economy)selling pressure causes further price drops leading to negative equity and lower personal consumption (~60%-70% of GDP in US) and booyah sub-primes submerged..and theres you subprime crisis..
now lets look at Aus today (income growth has been strong since GFC as a result of some factors we hear about all too often) hows our economy and income looking? The US had an issue before the GFC there was plenty of credit in a period preceding poor income/economic growth. Is Aus experiencing a similar scenario.
just my views...and i may be wrong..lots of capital chasing some kind of yield.
