Property crash? Unlikely, but if Joe Hockey’s right, watch out Australia

July 4, 2026 — 7:30am

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My friend, Sophie, (not her real name, obviously) was downcast. She and her ex-husband had sold their house for a substantial profit. But she wasn’t thinking about what they had made. She was thinking about the substantial discount on their reserve and pre-sale valuation that they had had to accept. An actual windfall had turned into a feeling of loss.

The wealth effect of the property escalator moves both ways. For those having to sell now, there is little pleasure in the long-term gain, only pain from the short-term perceived loss.

It’s a peculiarly Australian variant on human nature to feel robbed on a profitable house sale. Sophie felt like she’d had her retirement savings gutted. She was looking for someone (in addition to her ex-husband) to blame.

Australians have $12.8 trillion tied up in residential property, according to the Bureau of Statistics. They have more wealth in their personal bricks and mortar than in their super, stocks and commercial property added together. Owning real estate is the lazy person’s way to feel like an investment genius. Buy a residence, sell it, gear up, buy, sell, climb the ladder, pay zero tax, be happy. All you’ve done is enjoy your home, and somehow you’ve made yourself wealthier. The more than 10 million Australians who are in this game would be forgiven for thinking they’re pretty smart. It’s the Australian dream – or the Australian entitlement – to sit on your couch and feel your home making you richer.

The wealth effect of rising property prices has powered Australia’s consumer economy since at least the 1990s. Australians rank second only to the Swiss as the most heavily mortgaged........

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