Thanks Occam, Good points raised. I also believe that the investment property bubble has, until recently, been exacerbated by higher than average returns on superannuation funds. Many retirees cashed in large chunks of their super to buy investment properties believing them to be a 'safer' bet than the market. People retiring now have, at best, 2/3rds of their anticipated payout and simply won't be able to afford to buy an investment property unless prices come down dramatically.
Also, most major currencies (including the $AUD)have strenthened in the past two weeks by @ 10-15% against the greenback (this I believe is a sign that the $US has begun its downward spiral). This will cause some cashed-up overseas buyers to act with caution and perhaps not follow through with settlement of as yet uncompleted developments. Furthermore, if the $AUS continues to strengthen, this affects tourism (which is already sluggish) which in turn causes investors to sell up their coastal and city properties because holiday rental vacancy rates will increase. The low-vacancy rates experienced in most capital cities may become a thing of the past as many of those investors who don't have to sell may opt for long-term rentals rather than holiday rentals.
I guess that for many younger people who thought they would never be able to own a home, this may turn out to be good news. Although I own my own home and my property value will be affected by any property downturn, I think is is a necessary correction. The growth experienced since the late 90's in unprecedented in Australia's history and what goes up dramatically, must come down dramatically.
These are only my thoughts and may or may not eventuate. However, just think about how many people you know that have seen much of their wealth disappear in the last year. This is the worst global recession seen in a very long time and to think that Australian property will be spared is crazy.
