I thought I'd start off a new thread and invite members to post...

I thought I'd start off a new thread and invite members to post the factors they believe indicate that Australian residential property will correct in price.
While I'm not prepared to place an exact timeframe on this I firmly believe it has already begun and it did this quarter (Q410).

1. House prices are approx 35% above the long term trend and on each occasion this has occurred historically it has over-corrected to below trend.

2. The US housing market has had a retrace (not yet finished) yet our market has significantly outstripped the US in terms of price, so where does that leave our market?

3. Auction clearance rates have plummeted from approx 12 months ago.

4. Many if not all Australian capital cities are rated amongst the least affordable on the planet.

5. Australia's household savings rate has continued to decline since the mid seventies much the same as the US.

6. The average Australian household now owes $160 in debt for every $100 of income (160%) compared to the 1980's when the rate was $50 of debt for every $100 (50%) of income.

7. RBA figures indicate that total mortgage debt was more than 38% greater than total household income prior to the GFC, it's dropped back to approximately 33% presently!

8. Assets in Australia are not evenly distributed with around 1% of the population owning around 30-50% of all net household worth and around 20% of the population owning around 70-90%.

9. Baby boomers are the wealthiest generation ever and hold a massive proportion of the total assets (including property). The will need to dispose of these assets to fund their retirement but who exactly are they going to sell all their property to? The next generation simply isn't large enough to purchase all the baby boomers' assets.

There have been numerous attempts, most successful it seems given the bubble we're now in as a result, to maintain the increase in residential property prices. These have come largely from Governments however related industries have also played a role in this debacle.

As Australians have a tendancy to invest heavily in residential property (57% of total assets & 39% of financial assets incl super) it's little wonder that our spineless leaders have wanted/needed this game of charades to continue.

This currrent softening in house prices may very well prove to be the market taking a breath before the next leg up although I doubt it, but when this does end it's going to end extremely badly for many, many people.

The longer it plays out the messier the end game folks.

WC8