The basic instinct of humans is to have expanse of land and a shelter safely 'well within' it, to then go out and work for our food and essentials and then find all manner of places to re-create & create complementing technologies. On the way we (should) protect the young and the weak, we gain wealth that complements the existence of others and not at their expense.

We put instead our trust in corrupt centralised power that herd us, don’t want to train our population, treat them for illnesses, nor get them to work on time or give them anywhere affordable to live.

The building industry should be industrialised the ridiculous use of brick and mortar as the main element is pathetic. The building industry should be an export industry, why not give the world the simplicity of pre-fabricated housing, and live within our population means. Housing in terms of micro economics should be treated as a basic necessity ie for shelter, not the core business of an economy.

Lets move onto the better business of creating a more innovative society full of advanced environmental technologies that use less people, and smarter energy efficient materials.

These emperors without clothes that promote "confidence/bs" that run our society are spivs and hoons have no idea what they are doing, they know of course they are lying.

EXCERPT from DR:
"My reading of history convinces me that most bad government results from too much government." Thomas Jefferson "Commerce with all nations, alliance with none, should be our motto." Thomas Jefferson "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802).

In the F.T. (Economists' forum) there is a discussion about how the “Supplementary Financing Program” is being financed.

If I understood well what was being said, the arrangement was like this. The FRB made a currency swap with the ECB for around 600 billion dollars and then it lend the dollars issued against the euros not to the ECB but to the Treasury and book the euros received under general reserves. In this way the naked printing of money was obfuscated.

In other words. If you want to print money for government purposes then arrange a false swap and hope that nobody will notice.

Just have gone through a lot of comments above. I have a question: How do we measure whether House price is too high or not?
Can anyone provide some direction and concrete figures for comparison? Without concrete figure for comparison, all what we are discussing is just a 'GUESS'....

In many sub-markets, "affordability" is reduced by artificial supply constraints. Local government levels often fail to release available land because of conflicts-of-interest (councillors have vested interests in keeping the values high). many local governments also block more "affordable" housing development options.

During the 1980's, the Federal Government undertook considerable research into the development of cheap but effective construction techniques. This all got swept away and forgotten. Cheap credit enabled councils to demand brick McMansions with double lock up garages and tile roofs.

Dan's analysis is correct for many "high value" areas that have been supported by the resources boom and high value foreign individuals seeking a pad "sought after" locations. The boom has finished and "high value" individuals have less to play with.

The Battellino analysis may be correct for some "in between" suburbs. The outer metropolitan areas have already had some huge marks-to-market. Inland regional centres vary in line with the level of council corruption. The best have never been over priced because there has always been a reasonable flow of land available for development. The smaller country towns have been declining for decades but are now starting to take overload from the cities and this will continue.

Then our market went down we will be ok we have china to save us mmm
May be or not now may be 6 months or a year or 2

All the people who say that we will recover, soft landing maybe or not
What’s next (credit default swaps)or Unemployment?

The only people who have a great guess when the recovery starts are the people who called the crash before it happen (DR)

DR you are the Real Deal
Thank you for you time

Both of these types of people are on the edge. When the economy is seriously hit in the next 12 months these people will not be able to afford to keep their houses and a mass sell-off will commence. It is inevitable, the glut of sellers and limited buyers (even would be buyers won't be able to get the credit they need) will force prices down.

I am one of those people Battelino refers too who are "waiting for the right time to buy". But it's not a matter of making more money or having government incentives..nearly 100% of my wage is required to pay off the interest on the average home price (I am on an average income in this country). Why would I want to buy in this climate? I'd have to be absolutely nuts. I'm seriously waiting for %50 to fall off the prices of houses in this country, it is most surely a bubble and we can blame negative gearing, first home buyers grant, the influx of immigrants and the control developers have over 95% of land for new houses.

If you think people are just going to accept ridiculous prices for housing you'd be crazy. People have options, they can leave this country, they can rent, they can move in with mum and dad or they could join a commune or housing community. We are not like Japan, we have plenty of space in this country. In the UK prices have been falling at 10% a month recently. They thought it would never happen there either.

Like I said to my partner though the other day, if any financial adviser or politician comes out and admits things are bad, the market will panic and the problem will be much worse. This doesn't mean things aren't about to get bad... real bad.