But this is where I have to disagree.... prices can most certainly go lower than $850K, we are talking "boom/bust" cycles, no different to what we have witnessed in Perth when the market went bust in 2007. In particular Mandurah, an oversupply of new product investors/developers offloading and losing money.
The point is the base price will be dependent on demand, if there is an oversupply and people are desperate to sell this is where prices can and will continue to drop.
For those who entered this market (mining towns) in the early part of the cycle they should be sitting pretty regardless because they probably purchased at a very low base perhaps $300K+ depending when they jumped in of course. However, anyone who purchased over the last couple of years I expect will be feeling the pain, drop in house prices of 25%+ and similar with rents and oversupply. Try selling in this market, how low can you go.
MTR