Pericles:"Australians have become more affluent, and less prone to "penury","

Largely due to handouts from government in recent years, which have been indiscriminate and broad-ranging. They do nothing to address the housing opportunity issue.

Pericles, you might be interested in this story from News Limited, which tends to support my view.

http://www.news.com.au/money/property/first-home-buyers-cool-their-heels/story-e6frfmd0-1226095049138

"Research published by RateCity reveals the number of first-home buyers across Australia tumbled nearly 40 per cent in the year to May, down from almost 150,000 to about 90,000."

and

"Meanwhile, the Housing Industry Association released figures with RP Data showing land sales have collapsed.

The number of sales fell 6 per cent in the three months to March, down 43 per cent compared with the same quarter last year.

In contrast to housing, the cost of residential land had increased by 4.4 per cent for capital cities and 3.8 per cent in regional areas in the year to March. The weighted median land value was $198,980.

The HIA said excessive government regulation and costs were among reasons pushing land prices higher.

HIA research director Tim Lawless said the undersupply of land meant no real improvement could be expected in the construction industry."

As I said...

Antiseptic, you might be interested in this story, not from News Limited, which tends to support my view.

http://www.propertyobserver.com.au/news/aussie-house-prices-set-for-big-slide-leading-academic/2011071450806

"Australian house prices have started a substantial decline, a senior academic economist at the Australian School of Business says"

And the reason they suggest is that the amount of "new" money sloshing around the system courtesy of the stimulus package, is dwindling.

"It is likely that this is the beginning of a substantial housing correction, because the stimulus effects are continuing to fade"

It would appear that "affordability" of property is a personal issue, having to do with the amount of disposable income people are prepared to allocate to the task. Given that for every seller there must necessarily be a buyer, the variable is the "spot" price. Which will tend to fall, if the prices are perceived to be too high at any point in time.

“The economic rationale behind long-run house prices not staying above a multiple of four for long periods is that households simply cannot afford this through all phases of the business cycle. Currently in Australia the multiple is over six and therefore they are very likely to fall considerably in value,” Dr Reeves said.

As I said...

Yes, you did, Pericles, but I think we're arguing at cross-purposes. We appear to agree that they're too high - however you see this as perfectly fine and dandy and due for a correction, however I think you're missing the confounding effects that I've mentioned earlier. Young families cannot afford to buy homes in the areas in which young families might be expected to afford to do so, so when a transaction takes place at that "spot" price, it must be with some other type of buyer. By buying in at these inflated prices, such buyers artificially maintain pricing levels and by limiting land releases, Governments assist them to do so.

This will have the effect of making even larger parts of our dormitory suburbs rental dominated, with all of the problems associated with a low attachment to a community and with very little money spent on renovation or improvement.

Something that hasn't even been mentioned yet is the disposable cash that's becoming available to superannuees. I suspect that more than a few have gone out and bought "investment" properties at inflated rates and will continue to do so if other factors don't intervene, , with an eye to the rental income and continued capital growth.

Besides, the deputy governor of the Bank of England agrees with me, according to that article:

"He noted the deputy governor of the Bank of England, Charlie Bean, said at a conference in Australia yesterday that there may be little option for policy makers other than to clamp down on house price growth, even though it would be politically difficult and economically costly."