"For the most part negative equity is ONLY a problem if you need...

"For the most part negative equity is ONLY a problem if you need to sell."

There are so many people with negative gearing that the combination of negative equity (with th prospect of further losses) combined with ongoing losses in negative gearing WILL lead to forced sales.

Anyone with a leveraged position, whether it is property or shares or futures, should understand the meaning of negative equity.

Don't think there will be margin calls for property? Just wait until the banks send their valuers around and revalue the investment properties and tell the investors that they have a LVR exceeding 110% and that they have x number of weeks to top up or have their loan called.