In case noone has noticed, house prices in Australia in the last decade have got themselves into a major bubble. With lots of other countries like America, Iceland and the United Kingdom having already had a smaller bubble that has popped, where does this leave Australia?
Either we are different to the rest of the world and our property prices will continue to rise much faster than wages, or we're just collectively more insane than other countries and are letting our bubble get to record-breaking heights.
There's only really two ways out of a bubble. One: it pops. And a lot of people are left with negative equity, bad debts, and a feeling of having lost a lot of paper wealth. Two: prices simply stop going up, and they slowly return to normal levels by being eroded by inflation. This way stops people from thinking houses are the next big place to throw caution to the winds and indulge in some major speculation, and they return to being simply a place to live.
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