@ Freckle, not very different here in Brisbane. Properties around us, especially those on the water overlooking marina births (Manly) use to be hard to get. If one comes on the market, it used to get snapped by the buyer within days.
Now, we have number, all well over 1Mil mark sitting on the markets for well over 6 months. More and more coming up for sale, and longer it takes to sell.
Strange the way it looks, shurelly people driving new Merc S500 and Porsche 4×4 can afford the repayments for a house that is only 5 times more expencive that car they drive. I would expect those who lived in the house over 5 years to own it outright anyway, considering suburb's high profile buyers.

I am in manufacturing industry, we deal with over 500 companies in Australia. We get notified of buncrapsies now weekly, use to be unheard event. 

Times are tough, as economy tightens futher we are going to have disproportiannaly more people going bust and liqudating the assests at firesale.

I view it the same, agree here.
To make money, your description is spot on.
To secure money already at hand, you need to invest in asset class that is inflation adjusted, some also pay divedents along the way. Can be RE, Gold, Land… Just have to watch the cycles when making move.

I agree that during far extremes of inflation/deflation unexpected things happen. But, if the government manage to control it with in the reason, all indicators perform in line with inflation over the mid to long term. Like you mentioned, one extra zerro added to the prices every so many years, to ALL prices. But your bank loan is not indexed, it is still the same original amount.

Asset depreciation: well, it happens with or without inflation. All assets fluctuate in value again each other and to the FIAT as well.

As for wealth transfer, it’s an old story. Do not hold fiat, and you are not a subject to been inflated and taxed out You may still experience value fluctuation of the asset you hold, say gold / land / PI. But it will never be reduced to zerro like dollars can be.
All asset classes are inflation indexed by nature over the mid-long term, but FIAT is not. It’s unique in this respect.

+1
In simplified form, if you are in debt – inflation is good. That is assuming business, not personal debt.
If you are saver (in fiat currency), inflation is reducing your savings and is bad for you.

I have lived thru inflation and hyperinflation in Poland 1990, Russia 1992 and few others. General rule is, as inflation rate increases – more value you loose by holding the fiat over the same period of time. So people/businesses dump currency and buy goods, assets (land, buildings, factories, very large businesses, infrastructure and so on)  and start trading barter (in very bad cases, think Greece).

From PI investor with debt point of view, moderate inflation is very welcome. I know as I am and I can count my money well.

Freckle,
Agree with you on sentiment. This is how I see current state of affairs in RE as well as many other industries with few exclusions.
What fascinates me is now fairly large number of people on this boards still find profitable deals in RE with reasonable risk levels. I seem to be observing major decoupling from opinions here and my research on the street.
I do my daily property searches, weekly seminars with REIA, Developers, Property Groups and so on, weekends attending open houses and so on.
There are deals there, I my self got 2 x IP in the last 6 months, BUT those are more of the creative exclusions rather than a norm. A norm on the street for mam/dad investor is to LOOSE money in RE now.

Interesting stats, as long as you know how data is calculated.
Say, if we have more high end properties sales recently, it will indicate that house prices grow for this period:)

Very different story on the streets, people loosing jobs, even QUT in Brisbane just shed a lot of people who are long therm (over 10 years there). We dismissed over 15% from our manufacturing facility in last 12 months.

Who is buying in 2012 ?
For investors yield is too low, bank give higher return in interest rates.

source: http://www.allenrealestate.com.au
Not what you call a massive collapse by any means but, adjusted for inflation 15% loss from the top ever reached

Let’s see if trend continue:

http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/6416.0Main+Features1Dec%202011?OpenDocument

Wirsz advises Fortune 500 CEOs and fund managers on investing in real estate:

Bloodbath to hit Australian real estate, global property analyst Jordan Wirsz says

AUSTRALIA’S love affair with property is about to be tested amid predictions prices will plummet by as much as 60 per cent, with capital cities hardest hit.
That’s the Armageddon-esque warning from leading US real estate analyst Jordan Wirsz, who believes Australia is heading towards a property bloodbath as the global economic downturn spreads to China and eventually here.
Mr Wirsz advises Fortune 500 CEOs and fund managers on investing in real estate.
He predicts that a flood of properties will begin to hit the market in Australia from next year as investors scramble to bail out, leading to a property crash of magnitude the country has not seen before.
“Right now is not a time to be buying real estate in Australia,” Mr Wirsz said.
“The market has slowed substantially but residential prices are likely to fall up to 60 per cent, possibly even more, within five years.”
The outlook is even grimmer for land investments, which Mr Wirsz said are more speculative and will plummet by as much as 80 and 90 per cent in value.
Commercial property will also take a hit in line with the residential sector shedding at least 50 per cent of its value.
Mr Wirsz pointed to artificially low interest rates, high loan-to-value lending practices, overinflated property prices, unrealistic vendor expectations and Australia’s large number of second mortgages.
“I’m bearish about world real estate but I couldn’t be more bearish about the Australian market,” he said.
“There have been corrections but they don’t hold up to the scale of what is coming.
“The paradigm is that nobody ever believes house prices can go down but those who have bought at the top of the market are going to be sorely disappointed.”
He predicts property prices will be on a slippery slope next year when interest rates begin to rise, commodity prices peak and China’s demand for Australian exports slows.
A sluggish recovery will begin in 2016.
“If you are homeowner, be cautious, get rid of your debt, consider selling if you don’t plan to be in your house for more than seven years and downsize or become a tenant,” he said.
The only winners will be real estate agents cashing in on bank-owned properties, he added.
Adding to the glum outlook, properties in capital city would be hardest hit “because Australian cities are some of the most overvalued in the world and more speculative than regional areas”, Mr Wirsz said.
Mr Wirsz joins other international naysayers including visiting US economist Harry Dent who recently said Australian house prices were 50 per cent overvalued.
With few exceptions, local experts disagree with their predictions.
HSBC’s chief economist Paul Bloxham said for property values to crash there would need to be sharp rises in interest rates, unemployment and housing stocks.
That combination is not on the cards, he said.
“I am not of the view that there is a looming housing bubble in Australia as it seems many doom and gloomsters are,” Mr Bloxham said.
“Surely if the market was going to collapse it would have happened in 2009 after the Lehman’s collapse when we had the biggest aversion to housing assets that you’ve seen.
“All we saw was a 3 per cent fall in house prices and then they rose.”
Mr Bloxham believes an undersupply of housing, more rate cuts, low dwelling price to income ratios and strong overseas demand for Australian assets will act as buffer from global instability
“Some commentators aren’t doing the calculations correctly, they typically look at detached houses in the capital cities, they don’t incorporate apartments and regional areas, and they overstate the level of house prices to income.”
Sydney real estate agent Charlie Bailey of Ray White Inner West believes there will not be a burst because there is no bubble.
“People have been predicting house prices to fall every year and every year we have an increase in prices,” Mr Bailey said.
“In Sydney, we have 20,000 people a week looking for accommodation and not enough supply.
“I can’t see the city’s housing infrastructure changing any time soon so a prediction of a 60 per cent fall in property prices is a big call.”

Source: http://www.news.com.au/money/property/bloodbath-to-hit-australian-real-estate-property-analyst-jordan-wirsz-says/story-e6frfmd0-1226248472949

+1 on that one. Especially important now when yields starting to rise across Brisbane and it's time to start hunting.
Was it you I have spoken on the phone a month or two back? We discussed finding CF+ properties?
I got another one since then, two more on the list but could not get the price down low enough