Hi fludy, you are right property price can drop, there is...

Hi fludy, you are right property price can drop, there is nothing magical about brick and mortar. In small country towns around Australia this has been happening for quite some town as people (mainly young ones) are leaving for major regional towns and capital cities in search of jobs and better life style. However capital cities at least at the momemt are in different league, the influx of people from the country, migrants,investors for capital gain and first time home buyers are falling over each other in competing over limited supply. Read my post under Property Auctions Clearance Rates.
I know from personal experience, last year I had to buy a unit in inner Sydney and competion for availible units was so fierce that unless you were prepared to pay the asking price on the spot you just missed out.
I am waiting for the market to come back to normal so I can buy something bit more to my taste but at the moment the only thing still availible when the papers come out bellow ordinary.
I remember the times in Pomieland you mention in your post. It was in the days of Iron Maiden Margaret Thatcher who decided to break the power of trade unions and in the process hit the British economy for sixteen ( not just six). They were closing coal mines and sacking newspaper printers, Rupert Murdock scored quite coup sacking all his Fleet Street employees and switching to computerised type setting out in the country, which was much less labour intensive just to mention a few cases.
Unemployment skyrocketed and people could not pay their mortages. Many tried to default on but banks were beging them not to because the house price were down 50 % and banks were facing collapses themself if to many people defaulted .
So much for conservatives being good for busines.
Australia at the moment is not in recession, interest rates are affordable and unemployment lowest in years. Therefore even if most of the buyers dissapeared, most of us will simply hold on to our houses and units. There is no reason to sell and take a loss. It would take quite a hike in interest rates to force some price drop as most property owners can afford higher repayments, they just cut the lattes and capucinos,defer new Monaros and Porches and take overseas trip to Manly instead of Fiji. In my thirty odd years of living in Sydney
I remember the only people that got burned in Sydney Real Estate were low income earners living in Housing Commision flats and houses who got conned by the stupid State Government of the day -Guess which party- to buy the houses they were renting and were given fixed interest 13% housing loans which they could not afford. As the repayments were fixed at no more than 1/3 of those poor buggers income most of them went backwards and the outstanding balances of loans just kept rising as the interest charged was higher than their repayment. Some of these poor suckers indeed sold at loss. Some of them still have the 13 % loans are going nowhere fast. The lesson in this is: If a goverment wants to help you, just run as fast as you can.
Most of us normal people who do not qualify for "Govenment Assistance" have seen our property values steadily rise, usualy 3 to 5% per year for about 3 to 5 years followed by boom of 30 to 50% a year. This is longest boom I have seen in Sydney, and I will be glad when it slows down to more normal values, but I do not expect prices to fall just to stabilise.