Rehctub. In Australia it seems the banks are in pretty good shape. Latest I read, the Big 4 have an average of only about 1.5% of their loans classed as "dodgy", which effectively means the "average saver" with an account is in no danger. ie the asset side of the balance sheet is pretty good (the loans) and covers the liability side (deposits owed to depositors). A run on deposits would cause the banks to be (temporarily?) illiquid but not insolvent.

Meanwhile "the cowboys" have much greater levels of bad loans which DOES suggest these "mortage brokers" could be insolvent (ie the asset % which is "bad" means the true asset value is less than the liabilities). However, since they draw most of their funding from non-bank sources...such as mortgage funds, which have stopped redemptions to avert a run, these "cowboys" do not have to repay the loans from these mortgage funds....yet.

Nett result; banks and bank depositors are generally OK. Cowboys and their investors are teetering in slow motion. The banks are pulling in their heads while the (few?) cowboys remaining active are also wising up. On both sides of the loan game there will be busts with imprudent lenders and imprudent borrowers tumbling. Such is the invisable hand of the market. You cannot make a law against stupidity. Cheers.

Wake up everyone! The main reason for the high housing prices - but of course not the only one - was the high and increasing population growth rate fueled by a mining industry that was raking it in due to high metal prices and heavy demand.

The demand for housing thus created was lubricated by high wages on the mines, easy loans and mass (and understandable) speculation. After all it it seemed, and was far easier to make a fortune through highly geared property purchases than by slaving away at the office all week. People did both.
Government policies such as the first home-buyers grants and tax deductions on interest etc on housing investments all played a role but their passion for bringing more and more migrants into the country is why they should be most harshly criticized. This applies to both Liberal and Labor. What's the difference?

Kulu
I would suggest that the majority of the 'disposable' income generated from the mining boom was not spent on the housing market. Sure there are exceptions, esspecially in towns like airlie beach and other coastal townsa in close proximity to mining towns.

I would rather suggest that much of the money was spent on flash cars, boats and dinners. I am only assuming thought!

Rehctub

I can't state it as a fact that the majority of the 'disposable' income generated from the mining boom was spent on the housing market but the mines paid very well and there have been a hell of a lot of migrants arriving in this country over the last number of years who have to live somewhere. Many of these migrants work in the mines themselves or fill vacancies left by others who were attracted to the mines.

It makes me wonder what is going to happen to these migrant workers now that things have turned somewhat pear-shaped. Will they swell the ranks of the unemployed or will they be sent packing now that we don't need them anymore?

The whole idea of feeding the growth cancer with more and more migrants seemed to me at the time the sort of typically short-sighted policy from our governments that I have come to expect.