The problem with comparing Aus property prices to Japan, is Japan has a declining population. And given their baby boomers began retiring 15-20yrs earlier, they have a work force that is declining at a greater rate. A declining population is inherently deflationary, and more deflationary than seems logical. Imagine 2 Aus towns of population 10000, one declines at 1% per annum, the other grows at 1% per annum. In 10yrs one has a populatoin of approx 9000 the other 11000. All things being equal what are the property prices like in these towns, I would say one would be down 30% the other up 15% (before inflation). Aus prices may fall, and should fall 25%, but what should happen doesn't always happen. I like to think what may I miis when I look back in 10yrs. One scenario is rolling recessions/ low growth, with perpetual low interest rates. A poorly performing sharemarket, low term deposit rates and retirees may turn to property for yield as beats putting cash in bank. Thus property remain stable, and if you buy when the sporadic scare hits market you will do well. Just a potential scenario, from a bear who is reanalysing views.
