I cannot link to The Economist article on house prices. They predict Australian housing prices are due to fall 20-30%. Here's the quoted bit: In Australia, where the house-price boom has been driven by the buy-to-let market, investors now account for 45% of all new mortgage lending...As first-time buyers are squeezed out of the market, it cannot be long before house prices start to wobble.

The ratio of prices to rent (implied and real) is more than 30% over the 25 year average. Much like the share price bubble it is hard to see what can pop it while it is happening, but once it does it all seems so obvious that it was a bubble all along.

Of course if prices rose 18% so far in 2003 (again from The Economist) then a 30% correction just puts everyone back to where they were in early 2002. I suspect the enduring fascination with property and the bias in the Australian tax system will keep this asset class "overvalued" for a long time to come.