[Jodi]

Well, my thinking on the housing crisis is that it has two causes:

1) The "buy now, pay later" generation's inability to save a deposit of 20%. Or to save at all. They spend most of their time buying crap they don't need and then paying it, and its interest off. Come to buy a house, and they just won't be able to pay the interest payments cos they are aiming for a 90-100% mortgage. Oh, and of couse they want to buy their 3rd home straight away. Sorry fellas, buy the crappy 1 bedroom shithouse and sit on it for a couple of years pay off the mortgage as best you can so you have enough equity to get the 2nd house which is better, repeat until you actually have the house you want.

2) Baby boomers not selling their house, but instead buying a 2nd or 3rd house as rentals or property investment to supplement their retirement. They have been freehold for ages, and banks are falling over themselves to lend to these low risk people. This has the unfortunate effect of raising house prices so that first time buyers just can't affored a decent house at all.

I don't believe that interest rates are going to drop for the next 3 or so years, and because of that more people will be hitting hard times when refixing their mortgage or trying to afford a house. Therefore the market will slow then stagnate in the immediate future until interest rates will drop.

However this will only really happen when a resession comes along, so that means even more people will not be able to afford house payments, so the market will still be subdued even as interest rates are dropping. Only once the economy starts picking up after the resession will house prices start rising again. I reckon this will be in 7-12 years time.