Just keep in mind that when things are tight, people like to hang onto property for as long as they can. Also lending policies seem to tighten up.

When I went looking for a house in 2000, the number of houses on the market were relatively low, and trying to get a loan was a pain. 5 years later, more houses on the market, easier to get a loan, but prices were up.

Firstly, the coming decline/end (2018) to the investment phase in the resources sector will clearly lead to unemployment in that sector. Unemployment in a primary sector feeds through to secondary and tertiary sectors in the economy (services, retail etc). So the end result is a general down-turn in the economy. There is less money going around, banks are tighter in lending, and as such property prices tend to suffer.

However, the above will likely lead to the following important influences:

- Declining $A. This is stimulating for the economy - nations around the world are currently striving for a currency devaluation due it's stimulating effect.
- Capital previously tied up in the recources sector is now available for other sectors of the economy.
- Low interest rates. Again stimulate the economy.

So while we've been stuck in this "two-speed" economy, a decline in the resources sector will be a welcome change for other economic sectors (particulalry east coast) which have been suffering by way of a high dollar and interest rates. Not so good for WA though due to the flow-on effect from a decline in activity up north.

As for house prices, firstly buying a house is as much a personal/emotive decision as it is a financial one. As for the financial side of things, yes a rise in unemployment and a tightening of lending will not be good for house prices, however we have low interest rates which is of course good for housing.

Furthermore,
1. The Govt will act to prevent a slide in house prices, as this can have drastic flow-on effects.
2. Consider what constitues the price of a house - you have a) land value and b) building replacement cost. In order for house prices to fall, land values OR building costs must fall. Land values are a general demand/supply function so if the Govt releases a tonne of new land we could see land prices decline. Building costs could fall if we have a serious recession, but probably not likely. "Bread and butter" properties in desired locations are unlikely to be as affected as fringe suburbs or high-value properties.

In the end, IMHO we will not see a serious decline in house prices UNLESS we have a serious recession - in which case we're all toast anyway. Likely scenario, no growth for the next decade is my call.

But what do I know - I'm a tax guy not an economist.

Did you not see this current thread about the "Ecomony"?

www.seabreeze.com.au/forums/General-Discussion/Heavy-Weather/Whats-the-reality-of-the-Ecomony/

Decline towards 2018...

www.theaustralian.com.au/nocookies?a=A.flavipes

“The Bureau of Resources and Energy Economics has put some numbers around the likely fall off in resources investment:

bene313 said..
As for inflation, it's bad if you hold cash, but if you've got a house/mortgage:

1. Property prices inflate. As do rents.
2. Mortgage values decline in real terms. However the offset to this is higher interest rates.

Inflation is bad for everyone.

1.- House prices can't inflate any more... they're already the most expensive in the world and 10x avg earnings.
2.- Everything you do and consume will cost more... $2 petrol? $5 l milk? Everything... just bcos property seems less expensive is like being totally fark after being in a car wreck and the Dr. saying well at least your pecker still works.
3.- Wages are ALWAYS the last thing to inflate.

In reality what happens is that everything stays the same, except the money you have/earn becomes worth less. So those with cash divest out of it.

When all else fails people turn to the stars... www.news.com.au/technology/science/brighten-up-the-super-moon-is-on-the-way/news-story/69447a0cdaa9eb8e40a58d79dff72c7a

If you are buying a home to live in you should buy when you can afford to.

Property is likely to go down in value in the short term, but when it does, everything else is likely to follow shortly after.

If you think we are heading for a downturn, maybe it's worth investing in some poverty stocks and wait until Australia really bums out. Here are some tips: Cash Converters, Thorn Group, Money3, FSA Group, Flexigroup. All likely to do quite well if things go belly up.

When you sell your shares you will be all cashed up, and will see peeps living in their garages, begging you to buy their home. You'll be sitting sweet, and doing them a favor. WIN WIN