Your assumption is that the people buying the housing are all locals when in fact people from asia are buying up big time. Everytime I visit my mother in law in hong kong, she keeps showing me advertisements of apartments in australia and asks, why are these apartments so cheap?
Australian property is expensive relative to local incomes but not on an international level.
I do believe property prices will drop but not until the baby boomers retire and have no longer have a big income to negative gear.
