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Just to add to that Graham. By Federal Law, primary residences are protected however, if a contraction within the marketplace occurs, then those with an investment property are open to banks foreclosing on their investment property IF their LVR exceeds what the banks deem to be reasonable. This means that equity may be taken through a foreclosure of an investment property, leaving only debt within a primary residence.
Worse than that is when equity in a property is used as security against shares. Thousands of investment property owners had the LVRs go through the roof when the stock-market collapsed two years ago. This allowed the banks force owners to sell-up their investment property in order to pull the LVR back down to a manageable level of risk [for the bank].
The property market in Aust gained buoyancy quite quickly, but it's not stable, certainly not rock solid.
Any property price hike in the near future would be totally unwarranted and more than likely Primary Industry based. This of course doesn't help the girl serving me coffee at my local cafe in getting into the property market which could inflate yet again, meanwhile her boss certainly won't increase her wages anytime soon. So there's economic forces trying to split the economic into two divided classes, both industries and citizenry.
This splitting is called a dual economy, and is what the Australian Government is tackling right now.
If you're wandering what this new tax on Primary Industry is all about (Super Profits Tax), it is exactly that. Rudd's trying to put a handbrake on a possible upcoming rift in a single economy from forming a dual economy. He's doing a good job of keeping things together if you ask me.
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