Along with the illusion of 'growth' goes the falacy of a 'housing crisis'. We currently have population 'growth' in some parts of the country along with a concurrent shortage of residential property. Australias overall population growth is actually very low. What has been happening is people are moving interstate in droves because the grass seems greener somewhere else. Southeast Queensland is dying under the strain of this moving population. By world standards, the population of Brisbane still does not constitute a major city and yet they are experiencing a housing shortage. This is mainly because the influx of people could not be anticipated. Yet in other parts of Queensland there are vast developed areas full of empty houses as well as underutilised real estate. Property prices in these areas have sky rocketed in anticipation of the coming hordes but to no avail. So we have houses in Rockhampton with price tags in excess of $700 000 that remain empty. Don't worry there are still many people in places like this who demand $500 000 from a bank because they believe that is what they need to pay.

With the advent of modern automated machinery and oversupply of white collar workers what can one do?.... but get into the real estate game as agent or advertiser or whatever... and then perpetuate the whole real estate game!.. and assist others to perpetuate it.

By the way it is of no surprise to me that it all started round about when the Howard lead liberal party was voted in.

Savoir68, the problem has been going on for a lot longer than when Howard was voted in. The problem is not a political creation that can be logically blamed on one party or the other.

Since 1964 we have been increasing our borrowing at an exponential rate. See Steve Keen's website www.debtdeflation.com for a monthly update on Australia's borrowing binge. The charts show the problem very very clearly.

The problem as I see it is that we have wasted a large component of our national income on paying off higher priced houses, instead of using that capital to develop additional income through useful investment.

"Ironically, polulation (worker/consumer) growth is the only way to grow an economy,"

Not so! An economy can (and usually does) grow by an increase in productivity.

Porphyrin, you said re SE Queensland population growth that "This is mainly because the influx of people could not be anticipated." On the contrary, the influx was not only anticipated but positively encouraged since the late-80s at least, the state government actively sought to attract businesses and migrants with little conception of the net costs and benefits.

More broadly, I support comments by Nick, Plerdsus and Leigh on the general issues, and support the comment on economic growth. There was very little economic growth anywhere in the world in the 2000 years prior to the industrial revolution which began in the UK in the late 18thC, in all parts of the world the living standards of different classes were very similar, the standards of the wealthier classes in Rome were not surpassed until the 19thC. Population was not the driver, but new technology, methods and institutions.

Nicholas your analogy of everyone standing up at the football is a good one. We have a system that encourages people to spend their money "upscaling" or standing up so that now 90% or is it 95% of loans are for existing houses whereas even 10 years ago the figure was more like 50%. If the ratio of loans was back to 50% perhaps there is no problem?

One way may be to relate the loan to the asset being purchased rather than to the ability of a person to repay? That is, if the loan could only be claimable against the asset being purchased then it would mean that the lender does not have to worry about the repayments only whether the house can be sold for more than the value of the loan. Surely this would stop the speculative boom? What lender would be silly enough to lend on high priced existing houses that are likely to be less when the bubble bursts. Lenders are probably more likely to encourage people to purchase new homes on cheap land and hopefully the supply of new homes will bring the prices down particularly if we allowed lending for new homes against the ability to repay. However, one lender alone cannot do this because their rates will have to be higher to accommodate the risk and so it has to be one in all in which is why regulation may be needed.