The tragedy is that it will be first home buyers that will suffer. The property investor on average buys real estate as a form of super, or financial security and has the long term view of this asset class. On an average house, as I have indicated before it is just too expensive to get in and out. Say I have an investment property worth $500,000 and am panicked into selling because someone who has a PHD reckons we should go lower, so I sell , park my money, reenter when it is better, cost will be $100,000 , too much of a risk. If I have $500,000 in NAB, I can sell, park my cash, wait and re-enter for $100 plus CGT which could be $50,000 if we use the same capital gains tax model.Lot cheaper and easier.
Not to mention dislocating a tenant, giving them notice, meeting with real estate agents blah blah - too much trouble, we will ride it out as before.
When credit eases we have this as collateral and the whole cycle starts again.
