This is completely unrealistic and suggests little serious evaluation of the property marketplace in Australia. We have never had a market correction like that.
Further we do not have the conditions for a correction like that now with our economic environment being very different from the USA: - our mortgage market is very different. Their subprime market is as much as 10 times the size of ours on a percentage basis. Their lending practices were very different from our banks. Resetting fixed rates are nothing like the issue here they were in the USA because they weren't a popular product here. - most capital cities are experiencing an undersupply of housing. A variety of factors contribute to this including net immigration, land control and zoning policies, underinvestment from investors during a period of low yields etc. Suffice to say that the economic fundamentals are still overbalanced by demand - our economy is very different. We are growing, they are not. This means that wages are growing here improving people's capacity to service mortgages.
It is true that people are mortgage stressed - I work in the finance industry in one of the stressed areas mentioned by a poster. The reality though is that stressed sellers are likely to be selling to willing buyers and as a result the market may correct for a bit but more likely sideways than a general 40-60% sell off. There may well be large corrections in specific areas though such as outerlying growth areas as one poster mentioned.
A largely sideways market for a couple of years or so would be a good thing for all of us as it would allow wages to catch up quicker with prices thereby resetting affordability equations.
