Australia has one of the last remaining housing bubbles left in...

Australia has one of the last remaining housing bubbles left in the world (in terms of both rental return & income) combined with record household debt levels. Such a precarious situation was always going to be unsustainable.

Recent figures confirm that housing finance, auction clearance rates, sales volume and now house prices are falling. The FHOG boost merely brought forward demand and lured the final and most marginal buyers into the market, at the worst possible time - right near peak prices.

Falling demand, coupled with an expected flood of housing supply hitting markets over the spring, should see these falls escalate. We are now beyond the tipping point for the housing market. Considering some housing metrics show Australian housing as 60% over-valued and long term trend prices are about half current prices, the only question that remains is just how far will house prices fall over coming years?