Don't worry about bidders. There's no buyers. You will be the only bidder. If there are other bidders then you should think the seller is bidding. If you don't get this one, go for the next one.
Remember that :

Houseprice = Second highers bidder price + 1$

So, if the second highest bidder bids 200.000, you will have to bid 200.001$ and that makes the final price.
Just bid 60% of what you think you could instantly sell it for ( usually you will get 80% of the 'instant sale price' anyway, so you will get 20% discount. That's a good start.

Remember : houseprices in Australia are 50% overpriced. Anything you buy now at 60% of the asking price will STILL be overpriced by 10% in the long run. Don't go to extremes, stick to 60% of asking price. Don't go higher, you will ruin it both for you and the other guy bidding ( if there's another guy bidding ).
the lower hte house sells for, the cheaper the NEXT auctions will be ! So you are a winner no matter if you get the house or not, AS LONG AS you don't bid more than 60%. If you bid 80% or more, you will be the loser, no matter if you get the house or not.

Can you put your maths here ? Coz 8% return sounds like you are buying the property with a 50% discount

Yes, it will fall further. What you have seen until now is merely the start.
The correction is  coming from September 2009 and onwards. ( due to all the mortgages resetting from 6% to 10% interest rates, which will drown 900.000 people almost instantly )

Devo : It sounds harsh but it seems like some people have a thick skull. Their wrong choice was ALREADY made. They are in deep shit already, they have no clue how deep they are in. They should be panicking and SELLING their mistake before they get foreclosed on and go bankrupt. If they lose their car, their mobility and their ability to work, they will get in even deeper.

Advice like : "Seek advice" only costs them more money than they already own. It's CLEAR they need to sell.
There's no other option. Well yes there is another option : Both of you get a high life insurance and roll a dice, if you understand what I mean.

Not paying a deposit tells the seller : "I don't really have any money"
A smart seller will tell you you can buy it, but in the meantime continue to sell his house to someone else.
The sale process :
You pay the seller a deposit
He pulls it off the market.
If you don't pay a deposit, you cannot expect the seller to pull it off the market either.

Wake up Devo. Haven't you heard ? We're heading global recession, hyperinflation in USA, fannie and freddy are down 90% !!!! What the hell are you thinking ? That your house will be spared ? hahah you amaze me. Houses are being sold cheaper than they cost to build all the time, in fact in USA if you buy a house that costs more than it cost to build, you're a sucker, please wake up and you will see that this is all coming to Australia too, and it will be MUCH worse in Australia. Your house could be worth 300.000 now, in 2 years it will be worth 150.000. Accept it.

ps : did you hear the newest trend in USA ? "Buy 2, get 1 for free !" ( HOUSES… that is , not vegetables )

Hi Behrendorff.

You describe the current problem, and the reason why I say houseprices will come down. What has happened, is that society USED to take care of their children, they would work hard and leave a better future for their offspring. But the last generation has stolen their offspring's money , their wealth, by pushing houseprices up.
Now, their offspring cannot buy houses anymore, the immigrants come in empty-handed or with very few cash, and unemployment is rising. The fruits of your parent's generation is now becoming clear : By printing the huge amounts of money that they have done ( the banks ), they have removed YOUR part of that money and taken it for themselves.

Now, to answer your question as what you can do about it :
Think about this : 99% of the people looking for homes are in your situation : They cannot pay 500.000 for a piece of wood standing on some piece of land. We have reached a limit on what people can pay for housing, and the buyers cannot afford what the sellers NEED to get in order not to get burnt by their mortgage interest repayments. Now, the sellers will be able to hold out for a few months more, after which 1 by 1 they will be foreclosed by their mortgagers. I suggest you just rent somewhere, or buy a caravan and live cheaply for a while until the houseprices come down to sane levels. Do *not* get yourself in debt. Think of it like a standoff between buyers and sellers : I'm sure the buyers will outsit the sellers. The buyers have no choice since they cannot possibly pay back the mortgage, they cannot afford the houses, houses will HAVE to come down to sane levels for the market to pick up again. So , just wait a bit, save money and make sure you have enough money ready for a down payment, also have a job somewhere so you can get a reasonable mortgage when houses become 'available' again. At this moment, there's a HUGE surplus of houses on the market, none sells : There's no buyers who can afford them.

Remember : The ones that are in slavery are the ones that have bought houses in the last 3 years.
Remember that the ones that have no mortgage are not the slaves, they are free.
Don't become a slave of the capitalists, wait until the whole system falls apart ( which it is doing now ).
THEN buy a house to LIVE in, not to invest or whatever.

Houses are made to live in, they should be bought to live in, not for investment purposes. The government is under huge pressure to solve this problem, more and more people lose their work , lose their homes, and lose their hopes. The government's actions so far have been futile : They have been mainly focused at pushing houseprices further up and trying to keep the bubble going. This has not worked because people stopped buying houses : They cannot afford them. So , the government now will have to come up with another measure : Removing tax benefits and thus making houses less interesting for investors, thus lowering prices overall, and making housing affordable to the normal people again, instead of just the elite investors.

On top of what I have said here, there's a multitude of other problems making this already grave problem worse : Oil prices , unemployment rising , inflation out of control, rising interest rates etc.

It is too late to punish the ones who have stolen your future, but at least things will get back to normal, and the ones left holding the bag will be the ones who bought houses between 2006 and 2009. Anyone who bought a house in those times will get bankrupt, or at least lose a LOT of money ( 20-30 years worth of savings for instance ).

The share market. But not yet.
If you don't like taking risks, buy government bonds.