Is Australia a Crystal Ball of Things to Come?

Normally, I try to focus on Marin County in particular and California in general. Well, the Marin IJ (our local news paper for those folks who don't live around here) is useless as a source of reliable information regarding housing here in Marin as it's "owned" by wealthy real estate developers, contractors, and other such vested interests and as such promotes their agenda. And of course our realtors, like realtors everywhere, spew whatever is in their best interests which always boil down to no matter what the market conditions are, "it's always a good time to buy; buy now before you get "priced out of the market"; everyone wants to live here; it's God's country don't you know", etc.

So sometimes I have to look abroad. Many people have claimed that the deflating housing bubble in Australia is a crystal ball of what is to come here in the US in general and in CA in particular. This article (focusing on Sydney) makes some refreshing points:

"This city's property addiction has turned toxic. House prices are falling; building approvals are down. The market is slowing, and as it does, it is weighing down the rest of the state's economy. New full-time jobs are rare in NSW, and their number is growing far more slowly than in other states. It is possible the state is in a recession."

"Home owners and property investors may not like the idea, but the real estate slowdown is a good thing - provided it is gradual enough not to cause serious problems for the rest of the economy. The task for governments, though, is to make sure the conditions which caused this unhealthy bubble are removed."

""The governor of the Reserve Bank, Ian Macfarlane, says the Sydney market is so distorted that it is in young people's interest to leave the city. It is simply too expensive to live here. While we cannot endorse that advice, the governor has rightly castigated the real estate industry's boosters who argue that the solution to Sydney's problem is to adopt policies that will lift prices again. High prices are the problem, not the solution.""

"It would seem that many Sydney people have anticipated Mr Macfarlane's ideas: for all that the State Government has been repeating its mantra that 1000 people a week are arriving to settle in Sydney (itself an overestimate), statistics on internal migration show that for every four arrivals in the state, three residents depart. A greed-driven, unsustainable housing boom creates an illusion of wealth while eroding the basis for sustaining it. What young person wants to live in a city where hopes of home ownership must forever be postponed?"