Isn't this part of the problem when interest rate rises are used to exert some control over the economy?  If the objective is to spend less, then maybe an increase of the GST would be better and more effective. The political party who does that would be committing suicide.

If the property market appears to be flattening out, interest rates can steady or come back down again. The RBA would have to be complete bonkers to keep increasing in a flat property market surely. 

Yes personal bad debt, no doubt the key difference from a decade ago. Maybe should of included this in your opening post as it certainly supports your argument.

I'm very new to this so my arguments are simply speculation based on hearsay and what I read.  You raise some interesting points. A person i worked with previously argued something very similar that what happened in America was due to hit Australia in the next couple of years because it is just not sustainable. Property prices have also been inflated due to government grants and such which are being phased down / out. I see wages a major factor in all this in addition to inflation, interest rates and other variables that are somewhat controlled aspects in an otherwise free market economy. The thing is however, were not these same arguments being expressed 10 years ago and longer? Yet despite the doomsday forecasts, property prices have continued to rise and with it, capital growth and the acquisition of wealth for people positioned in the market. I only own my home I just bought 3 months ago and have to say I'm a little nervous about interest rate increases atm. At least the RBA has some control over property as they can lower interest rates if the need arises, but seems their going to continue going up a little further in the near future. Intereesting topic though would be good to see some perspectives from those practising property investing.