Agreed on all points. Question is : what can be done? I would say a property price drop would be a good thing because it would feed into lower rents for every

Agreed on all points. Question is : what can be done? I would say a property price drop would be a good thing because it would feed into lower rents for everything. But that, of course, would have damaging wealth effects for people who lose everything when their mortgage went underwater, and the banks would take massive losses on their oversized residential mortgage portfolios. More economic growth might reignite property and job markets. I was talking to a friend of mine in Sydney who earns 200k plus. He was struggling with the idea of buying an average townhouse in an average Sydney suburb because his mortgage + expenses would run over $3k per month. It's madness. Are we to just stagnate our way out of it? Hold property prices and rents level for 10 years while incomes eke upwards? Or is Australia destined to be in the Norway/Switzerland/Sweden club forever more, and the cheap-as-chips country of my youth is gone forever? I just can't get away from the uncomfortable feeling that whatever adjustment comes along will be painful.