Variations of this headline have been running for years now, so I don’t really think this one is going to be any more accurate regarding timing than any of the other predictions. There seems to be an un-ending political will-power (from both sides of politics and at both the state and federal levels) to continue housing policies that predate Australia’s last recession, and to offer only stop-gap measures to get young people back into the housing market or to maintain prices.

I live in a rental, which is being rented out below what the market rate would be, thanks to an extent to negative gearing. There are at least half a dozen building sites in my street, which is about 20km from the centre of Melbourne. The median house price has soared this year to well over AU$1m (units are more than half that). We get at least a dozen flyers each week, written in both Chinese and English, advertising that there are buyers in the area with budgets up to AU$2m or that houses have sold for more than AU$1m.

When the bubble does burst, there’s no doubt that it will be disastrous in parts of Melbourne and Sydney. It’s unclear whether there is the capacity to make up for a glut in new housing projects with public infrastructure projects. That’s not to mention the enormous hit that huge numbers of home owners will take when their homes drop in value.

No doubt the post-mortem will be quite damning for many policy makers.

Edit: ‘fraction’ was inaccurate, and it’s academic as to the extent negative gearing affects rents.