afr page 52, page-19

I agree that Australia's potentially creating its own subprime with the first home buyers grants. However, in Victoria the grant is expected to cease on the 1st of July, but some individuals in power are calling for an extension of the handout. I don't understand why it needed to be there in the first place, other than to boost the economy short term.
In fact, the housing boom started pretty much at the same time the housing grant scheme commenced. Add easy to obtain credit exceeding 100% of home values and pressure from property investors, its no wonder we've got a crisis on our hands.

Today, people can afford to pay off their loans, but they can't afford to live well anymore due to the high repayments, hence money flow into the economy has literally stopped. It's the reduction of this money flow that can ultimately be the demise of high home prices as job losses continue to sky rocket. It may not turn out any where near as bad as this, but if the pattern continues then the end result will be worse than imaginable.