Timeline
1985: Australian government quarantines interest expenses, so that interest can only be claimed against rental income, not other income.
1987: Negative gearing is reintroduced.
1998 to 2008: real net national disposable incomes increase by 2.8% a year on average from about $32,000 to about $42,000 per year. There is a rise in the number of two-income households, relaxation of lending standards, active promotion of real estate as an investment, population growth creating demand that was not matched by supply, planning and land release issues and a tax system that was skewed in favour of property investors.
1999: Capital Gains Tax reduced from 100 to 50 percent (for property held at least one year), while 100 percent of costs remained deductible.
2000: July - The Federal government introduces the First Home Owners Grant of $7,000 for established homes, and $14,000 for newly built homes.
2003: The government, in seeking to address rapidly rising property prices, set up a Productivity Commission Inquiry.
2004: The Productivity Commission Inquiry on 'First Home Ownership' published its findings (No. 28, 31 March 2004). It identified several factors that had contributed to the rapid increase in real estate prices, including overall fairness of the tax system, lending regulations, lower interest rates and planning issues.
2008: A Senate Select Committee on Housing Affordability was established. Its final report 'A good house is hard to find' included dozens of recommendations.
2008: October - The First Home Owners Grant Boost is introduced as an addition to the First Home Owners Grant. This consisted of an extra $14000 available to first home owners buying or building a new home, as well as an extra $7000 made available for established homes. First Home Saver Accounts are also introduced, where the Federal Government will contribute up to $850 per annum towards savings for a deposit to purchase housing.
2008: December - FIRB rules allow temporary visa holders including students, to more easily buy up 'second-hand dwellings'. Changes did not require notification of sales be made to the FIRB and the $300,000 cap on price was removed.
2009: October - First Home Owners Grant Boost is withdrawn. The UNSW City Futures Research Centre director said "the boost has resulted in inflated prices" and had created "a bit of a mini-bubble". A senior economist of Housing Industry Association (HIA) said the boost has not pushed prices up significantly.
2009: November - "capital city house prices . . climbed average 10 per cent" in 2009. Melbourne led the "house price boom, with values up 14.9 per cent in the 10 months . . to an average of $481,247."
2009: December - Reporting of RE data was questioned by one source: "AVERAGE house prices have been overstated by up to 18 per cent by the real estate industry . . . In September the average house price quoted by the Real Estate Institute of Victoria was $67,000 higher than the official figure, based on preliminary valuer-general data . . "
2010: January - The removal of First Home Owners Grant Boost. Mortgage applications reduce by 21.2%. First-home buyers account for 13.1 per cent of new loan applications in December, whereas nine months previously they were at 28.1 per cent.
The Economist warns that Australian prices had effectively raced ahead of reasonable rental yields stating; "In the American housing market . . homes are priced at around fair value on the basis of rental yields, but they are overvalued by almost . . 50% in Australia, Hong Kong and Spain." Spain subsequently had a property crash.
2010 March: ABS declares that house prices "soared 20 per cent in the 12 months to March" - a rate that was described as the "fastest ever recorded" in Australian history. The Head of Australian economics at National Australia Bank admits "This is a shocker".
2010: April - Rules allowing foreign investment in real estate that were introduced in 2008 are withdrawn. Temporary residents are required to sell their Australian property when they leave Australia.
2010: May - 'Australia's Future Tax System' (AFTS) Review (aka 'Henry Tax Review') makes a number of recommendations on policies that could affect the housing market.
The government responds to the AFTS review findings with a report 'Stronger, Fairer, Simpler: A Tax Plan for our Future'.
RBA Cash rate is raised to 4.5%. Rates for major banks now vary between about 7.2% and 7.5%.
2010: November - The RBA raises interest rates 0.25% to 4.75% citing the "economy is now subject to a large expansionary shock from the high terms of trade"
2011: February - New housing loans approved by Australian banks fall 5.6 per cent to a 10-year low in February.
2011: March - Prosper Australia launches a campaign for a "buyer's strike" in an effort to drive down prices.
2011: April - Melbourne median home price falls by $36000 (6%) to A$565,000 in March Quarter.
2011: May - The number of properties for sale in Melbourne double.
2011: June - Number of home loans in arrears 90 days overdue, rises to 15 year high.
2011: September Quarter - House prices fall 1.2% over the quarter.
2011: December Quarter - House prices fall 1.7% over the quarter in non-seasonally adjusted terms and 0.5% in seasonally adjusted terms -according to RP Data. House prices fall 1% over the quarter and 4.8% over the year according to the Australian Bureau of Statistics.
2012: March Quarter - House prices fall 1.1% over the quarter.
2012: October - The RBA cuts interest rates to 3.25%.
2012: December - The RBA cuts interest rates to 3.00%.
2013: Data released by RP Data, APM, Residex and ABS in January and February 2013 showed that Australian house prices continued to rise throughout 2013. This means the great Australian housing bubble has been expanding for almost two decades, since the mid-nineties, making it the largest and longest lasting bubble (of any type) that has ever existed in known history.
2013: May - The RBA cuts interest rates to 2.75%; the Australian Dollar trades from $1.03USD to $0.97USD.
Read more about this topic: Australian Property Bubble