From Zero Hedge... Property anywhere anytime can't KEEP rising faster than wages. That's just arithmetic. Australia's long love affair with property has been on steroids for 18 years now. Banks, promoters, financial advisers and even sections of government, have been driving the Ponzi (that's what it is - cash flow negative and dependent for success on endless capital gain). Half of Parliament is into it. The average buyer - investor or owner-occupier - thinks this is just the magic of the Aussie property market and sees no end to it. The 18 year boom has been due to specific factors (1) population increase by 50% in 40 yrs due to accelerating immigration (2) they all settle in the major cities, so (3) relative shortage of supply (4) tax subsidies favoring investors i.e. negative gearing during ownership + 50% CGT deduction on sale - to the point that more houses were being bought by investors than owner occupiers (5) progressively falling mortgage rates 2y to artificial rate suppression overseas, that the RBA has been forced to follow (6) lenders in Aus short of local deposits sourcing > 50% of their funds from huge overseas capital markets at low rates (7) Chinese buying - like Vancouver (8) bonus-fixated bankers pumping loans as fast as they were able (9) dramatic rise in interest-only lending to > 50% (10) regulators initially blind to the issue then frightened to do anything about it (11) foolish govt that sees housing as wealth creation, when its only wealth transference (12) most importantly - no recession for 25 years; due to China's massive appetite for raw materials. There's a generation in Aus that has no conception of recession, wouldn't believe it could happen, who've been encouraged by lenders to buy everything on credit. So Aus has the 4th highest personal debt in the world, there was no deleveraging after the GFC, and it's still rising. Several of these factors are now reversing, some rapidly. Just how far property will fall is unknown but largely dependent on China, because if China sags then Aus will hit the deck and its banks will cop a hiding.