House prices in Australia during the GFC fell 15% quite quickly.
The only thing that rebound it was Kevin Rudd massive first home buyer boost and the RBA slashing the cash rate to free up money for companies to make it easier to operate through the crunch - but was also used by property investors (hence RBA's 2010 warning).
Once this stimulas ran out prices started to fall again, so Labor changed some super rules to make it easier for people with self managed super funds to buy property.. this is whats propped it up more recently, and now china increasing their buying as they are now worried about their own housing market and looking for safe places to put their money other than gold.
Our government doesn't want to talk about housing as its a rough subject that will lose them votes, this is why labor propped it up was to try and keep the majority (home owners and investors) happy to avoid negative votes. Also when you inflate housing it also kicks onto the rest of the economy creating jobs and wealth for everyone, so makes voters think your doing a good job.. (well, till the stimulas spending stops)
When china goes, there will be no more stimulus money available to prop housing up again, and the RBA cant lower the cash rate anymore without inflating credit bubbles further in Australia which the RBA was quite clear on today he doesn't want to happen.
and when interest rates do go up, I'm also wondering how big the negative gearing bill will become, 2% interest rate rise alone will make the Tax return from the ATO balloon like crazy with how leveraged people are. They keep talking about winding it back in the tax reviews, with libs cutting costs after labors massive spending spree, I wouldn't be surprised if we see this rolled back gradually in the coming years.
My end goal is to buy a house after it corrects, I have the cash to buy out right, just need to bide my time as the next market crash by China/USA (probably domino together) should be the final one where all lessons are learnt for another 70 or so years.. I cant see how property will remain high after this next credit crunch, chinease selling, and interest rates forced up by the rest of the world doing too much QE..
