Rtic, all this has to be viewed through the reality of a weaken global economy and global currency debasement (trade protection).
It's hard to distinguish a bubble if your in it. Like the frog and warming water.
Now the mining bubble is bursting in spectacular fashion I believe the RBA will find it easier now to control our AUD. The AUD seems to be pegged to commodity prices which means that lowering internal interest rates will be effective more so than if Commodity prices were higher.
Damage to our manufacturing base may never be repaired although with strong national leadership it isn't impossible to rebuild a niche area.
I live in an area where all land sold since the 1950,s was financed by government terms and interest rates well below market rates (like 5% below).
The State government was actually creating a bubble under property prices for years and now that banks have tightened lending (an admission that prices are expected to drop further) eg 40%+ deposits, prices in the area are having a specular fall.
Not so general property prices. These are linked to the slow demise of the banking system as we know it, are on a slow predicable slide. Those boom mining towns are now heading toward a real cooling off as well.
Creeping upward pressure on unemployment reduces the confidence level of potential home borrowers, selective bank lending, irrespective of the gloss painted over it and an over supply of property nationally are putting enormous pressure on the property economy.
Building starts are being crushed.
This is the start of a realistic appraisal of how, when and why we buy property.
As property prices drop it will be increasingly harder to buy property.
Banks etc will require big deposits held with them to qualify for a loan and outgoing ratios will be lifted.
I can't see a spectacular property plunge, just a slow cooling
When we can look at the other side of the GFC we will see a changed world and with an Australia enslaved to certain markets. Our children will look back at the last 20 years aghast at the stupidity of our governments not to have foreseen and acted upon our demise and the short term greed of Australians relying on property price increases and borrowed money to fund an unaffordable retirement.
