Over time society changes, and changing house prices is a symptom. Don't forget that although houses are a lot more expensive than in 1952, lots of other things were a LOT more expensive (whitegoods, clothes, cars, travel, some foods, etc) than they are now - a fact conveniently overlooked by some. People also had lower real incomes, and credit was far, far harder to get.
Will house prices revert to pre-1952 levels? Anything's possible, but I think it's extremely unlikely. The whole country would pretty much have to go broke first.
When you say society I think it is more specific than society changing generally.
In the early 50s rent and other controls were lifted around housing. Many have noticed this jump in stapledons graph and I have heard this mentioned before here and elsewhere.
More recent the bigger move on the chart; In the mid 90s in Sydney urban consolidation policy was adopted and ratcheted up over time.
It followed later then in other capitals.
I think policy is the key to the woes or strength in property. You can have any amount of economic activity but in a vast continent such as ours depending on policy you can still have, falls, rises or something in between. We have had dramatic periods of population growth and / or economic growth over the 100 odd years in that graph and this in isolation does not change house prices by much.
Also you can spend as much as you like on other things or have times of larger disposable income but in the end in a country like ours where predominantly residential land can be made outside of prime areas costs should be the governing factor not demand. It is recent years where demand drives housing above all else when the government has controlled the supply side to the point it just ticks away with any excess taxed out of it.
It is the non prime areas becoming so expensive to develop that has pushed prices to the levels they are now IMO. Credit and disposable income is an enabler, sure, but in isolation no matter how much cash you throw at something if it can be made efficiently price should follow costs plus a fair margin.
If disposable incomes were such a large factor than there would be swings like todays every 15 years or so on that chart.
For the Future;
If the government in response to falling activity in home building starts to subsidise development or pare back developer levies than I imagine we are likely to move further into the negative. Look for policies like that in QLD with 10k grants for new builds only. If on the other hand to support activity they support prices generally as they have done in the past with grants for purchase of any dwelling then activity increases will only be secondary to rises in price.
How do you recognise the difference between these policies? Any policy that is aimed at reducing the cost of new homes should over time place a drag on existing house prices. Once the initial activity rush is worked through (think Melbourne FHOGBoosts only for new homes especially in regions). While people may not think it there is a ratio / connexion between even existing housing in prime areas and new housingn in non prime areas. You will not have new 4br homes on the fringe of Melbourne selling at $150,000.00 with housing in Toorak selling for 2Million. It will not happen. Suburbs radiating out are affected by what price the new fringe houses sell for.
On the other hand any policy that aims to increase price levels to bring on activity in a secondary fashion (FHOGBoosts, shared equity schemes etc) will have a generally positive effect especially in the short term.
The issue with either policy as with all government policies is they can easily over reach and cause larger problems down the line. Whether they over reached in late 2008 will become apparent over the next 12months. The other issue with a housing market driven only by demand with supply manipulated to meet demand at a certain price is demand swings much more wildly than supply. Supply costs if left to their own devices with land on the fringe valued solely at alternative use value move roughly with inflation. This cost can be negative over 12 months but not dramatically so. Even in the great depression 10% p.a. deflation was considered dramatic. In Perth we have nearly witnessed this in housing over the last 12 months.
The most sustainable housing markets it has been found in recent years after the US sub prime crisis are those with the least government interferance. Even in the USA where the government all but stayed out of the market the GFC is nothing but a blip on house prices in those centres.
