Unfortunately we can't allow house prices to deflate too much, the nation's private wealth and private debt are too closely tied to housing. The more we let house prices fall, the less spending capacity mortgage holders have; the harder it is for owners to satisfy the debts already borrowed.

This is because when housing deflates a certain percentage of borrowers, usually relatively new borrowers who have borrowed 'at the top of the market' find they are paying off a debt that is larger than the current sales value of the asset they're laying off.

In itself this isn't too bad, but it increases the risk of mortgage default. Housing deflation often goes along with a wider economic downturn. If mortgage holders no longer have a job things get serious with the house they're trying to pay off quickly. It is also a psychologically painful position for mortgage holders to be in, and decreases their confidence in the economy, do that at a mass scale and we can get ouslrselves the economic downturn that actually loses jobs. Humans run on sentiment, their feelings about something.

A market is all about sentiment. If we cause a situation where house prices are seen to be too expensive, therefore must fall, then we've created the pin for the housing bubble and just used it. Having all the effects I've explained and others.

I have no doubt that housing is actually a bubble, but we can deflate the bubble by carefully lowering prices and increasing wages to meet at a more sustainable position in a decade or two, or we can pop the bubble now and scar the economic lives of two generations of Australians who had to, and were allowed to by government and banks, borrow far in excess of what their wages should have ever allowed.

I'm a millenial, so far my generation has done nothing of note, I see a reason for this, the economic jack boot of the high cost (monetary and non-monetary) of participation in Australian life that previous generations have built along the way for themselves has suppressed the potential and dynamism of every generation from the millenials on.

I see few avenues for younger Australians to build anything of note on their own without institutional help. This is a problem because its like adverts on lemmy it would alter the purpose of the network. A young person opening a café on their own, compared with investor assistance would be two different shops.

If we were to deflate the housing bubble by quickly reducing house prices this would destroy the financial wealth millenials, and increasing amounts of younger, have been able to gain. Further decreasing the likelihood of that generation/s doing anything of note, bar surviving.

So housing comes down to agency of individuals to act without domination, by government or private interests, in a liberal democracy. Howard, et al, increased the domination of younger generations by government and private interests. This has killed the dynamism across multiple generations that makes a liberal democracy a more viable form of national organisation than many others. And housing is the emblematic example of this problem we've caused ourselves.