And here's another reason I think Aus property markets provide challenges the average investor would find insurmountable.

A graphic like this screams bubble to me. Simply because the Australian market hasn't corrected significantly yet doesn't mean it won't. 

The concerning thing about this graph is that it points to a market that is overvalued by a factor of 2 and that any correction to the mean would see values halve. That's a huge amount of wealth that could be vapourised.

Definitely not but both those sectors are problematic as well. Manufacturing has been contracting on a steady basis for some time and that trend seems set to continue for some time at least.

Food will be challenging as we move forward. Right now we're up against the water barrier and right after that is energy and right behind that are fertilisers. Given all our smarts, all our new beaut technology we still haven't managed to push food production up over the last 20 years. In fact we're loosing the battle some would say. Globally we need to double food production by 2050. That's only 40 years away!!

It's likely we'll have problems just trying to maintain production levels as our own population increases. We currently export something like half our production. Those export levels aren't like to increase.

They wouldn't be the ones going broke would they. The price of iron ore alone shifted our Terms of Trade (ToT) from positive negative. That's without anything else

There's no problems there. Where the problem lies is in the manipulation of the price of PM's to keep them down (long story). What that does is suppress mining and consequently,  jobs, capex, exploration, investment etc

The problem with resources is they make up such a large portion of our export market. 

This is how it works; Over the last 20 years the world has gone ballistic on a credit frenzy unparalleled in history. That enabled countries like China to climb of the floor and fairly quickly become the worlds manufacturing center for cheap mass produced goods. That in turn meant increased wealth for the Chinese and consequently a spending spree on infrastructure to bring themselves out of the dark ages so to speak and be able to foot it with the rest of the world. That in turn saw a massive increase in demand for our raw materials. that made us kinda rich. Well so we thought. Trouble is our debt levels after this boom don't look too crash hot either.

Now the problems is that the global economy is running off a cliff so what happens to China. It slows down we slow down. To date its been pumping massive amounts of stimulus into its economy to stop it from tanking. That's led them to a debt situation as bad as the US and a few others. In fact it's probably worse. 

Resources only have to pull back 10% and we're in trouble.

I've never considered interest rates as a driver of boom cycles. That can be seen in previous boom cycles where values still lifted above trend even though the cost of credit was exorbitant by historical standards. I've always considered rates as enablers not drivers. Globally govts relaxed fiscal policy and gave the banksters the green light to lend more. As property prices rose the trend became to access equity and leverage in order to gear up on property. The driver became a loop of equity access + equity increases rinse and repeat. Feeding the frenzy where spruikers that were thicker than fleas on a dogs back.

The primary reason for McKnight's success was this loop. Without this his ability to acquire properties would have been severely limited.  

The party never really got going until the late 90's. The big problem is that the 98 – 08 ramp in property prices was too high too fast. It simply out stripped the consumers ability to keep up. Since 10 the markets been flat and will stay so until credit capacity returns to the consumer. 

Credit volume (access limitations) and availability (price/rates) are no longer supporting property prices. The consumer has exhausted his/her credit capacity. What little capacity remains is being conserved while they figure out which way national and global economies will trend. 

Australia has remained stable and continued to grow albeit much more slowly however that growth came on the back of China's spending binge. Their capacity is now considerably limited. The next decade or so will more than likely see a reversion to the mean on average. Until a new driver of growth materialises economies aren't going to enjoy the boom conditions of the last 2 decades.

No it doesn't. You can only create a new household if you can meet and access the conditions below.

You have a poor understanding of demand/supply dynamics.

You're getting closer but the population meme is a red herring. The answer is in the second part… banks lending money.

You can have all the demand you like but with out the ability to access credit the demand driver can not be engaged. 

Here's an example for you. Arguably there's a high demand for Ferraris amongst males 18 – 40. So why don't we see hundreds on the street. Because only a small percentage can afford to buy one. Provide a viable method for the average worker to buy one and sales will go up.

Pricing, credit and the cost of credit are the primary drivers of property markets. Second to that is credit capacity. 

At this point in time we have relatively easy credit criteria and low cost of credit so why isn't the market booming given Australia has a relatively stabile and high population growth? New construction is crashing. 

Answer: pricing and credit capacity.

The scary thing is it's not just the US. Everywhere is the same. I've lost track of them now but there was a good white paper put out by one of the large global institutions, IMF I think, about how wealth distribution can mute or drive an economy. The overwhelming evidence suggested wealth accumulation at the very top could predispose a country to revolution if the size of the group within the poverty class became too large as percentage of the whole. French and Russian revolutions where classic examples of this.

In the US your talking 50% of the population is either in poverty or borderline poverty and the next 20% are at risk should something go seriously wrong. In the last decade you have an increase in food stamp use from 15 – 47million. That's a staggering figure. 50% of Americans can't put $2000 together with 2 weeks, 40% have CC debt larger than savings and so it goes.

They now waffle on about things they call "Growth corridors". What they should be focusing on is how to prevent or restore the economic wastelands that continue to spread throughout the US.

You should read this book;

Days of Destruction, Days of Revolt (a review by By PHILIPP MEYER NYT)

Anyone who grew up near a postindustrial area — who has seen a middle-class town become a pocket of destitution — will not find any one chapter in this book too shocking. What is shocking is the degree to which this depth of poverty is found everywhere, from rural Indian reservations to near-slave conditions in Florida tomato fields. These are not pleasant stories. They are the very sort of thing we all prefer to forget so that we can focus on our daily lives, and this makes it all the more important that they are recorded.

and if you think the US won't go the way of the French or Russians then your betting against history. 

Hedges is a serious writer and thinker, and as in his seminal work, “War Is a Force That Gives Us Meaning,” he is brilliant at depicting human life at the extremes of existence — from war to grinding poverty — and explaining the effects on the human psyche. But if in that book he was more like a teacher, in this one he is high priest. We’re given little room to form our own opinions. “There are no excuses left,” he says in the final chapter. “Either you join the revolt or you stand on the wrong side of history.”

Spanish military are openly discussing a coup d'état while Catalonia seems hell bent on secession. Here it comes. The last war was preceded by the Spanish Civil war. 

Déjà vu?