Imagine a place where housing’s hopelessly unaffordable. Where it takes six or nine times an annual income to get a home. Where young people, despite their inexperience and lack of money, are dangerously pushed into piles of debt. Where folks are told there’s a shortage of land, in a country that’s mostly empty. Where government has purposefully inflated real estate. Where anyone can flip on TV and see what housing excess did to the middle class in Britain or America. But where everything thinks it’s different.

And it ain’t Canada.

Two weeks ago a home buyers strike emerged in Australia.

Interesting, because the country of 22 million is in the throes of a housing bubble just like ours. Prices have raged higher since the economic crisis three years ago, fueled by low rates (now higher), easier credit and a real estate-horny government. Weeks ago The Economist figured Australian houses are overvalued by a withering 56%. And Demographia ranks Sydney among the most expensive cities in the world (9.6 times income), right ahead of Vancouver (9.5).

Speculation is rampant. Investors have snapped up properties, but (like here) market rent won’t even cover the cost of carrying them. And the MSM is filled with opinion pieces and quotes from politicians and experts saying there is no bubble – just a robust market based on economic fundamentals. Hic.

But at least some people aren’t buying it. Like Paul, who reads this pathetic blog. He writes me:

I’m a Gen Y and of all my friends here in Australia very few have actually bought a house, what’s more these few only bought prior to the start of 2010. The majority of my friends however (including myself) rent, and of that majority none of them want to buy a house at the moment. The interesting thing is, go back to 2010 and most of this majority wanted to buy a house at that time, so sentiment has changed fairly quickly (at least for my generation).

It also mirrors what’s happening in the US. Surveys show that while 85% of Americans thought owning a home was a swell idea a few years ago (in Canada it’s now 90%, says RBC), that number has now plunged to 69%. Worse, among people under 30, six in ten want nothing to do with real estate.

So, a group called Prosper Australia, which usually lobbies for tax reform, has issued a call for all property virgins to remain whole. Stay away from house deals, it says, before “the flip into a falling market” which is says is imminent.

Here’s the media release:

“When the Great Australian Land Bubble bursts – just as land bubbles all around the world have – the freshest buyers are totally exposed. They face financial ruin as house prices fall below their debt. The crippling mortgage repayments become pointless. We cannot help those who have recently bought, but we can warn prospective buyers – particularly first-timers whose innocence and heavy borrowing leaves them uniquely exposed.

Residential properties are trading at between six and nine times earnings – depending on assumptions. Historically, they have fluctuated between two and a half and three times earnings. A buyers’ strike is the only rational response to current land prices. Frankly, prices are ridiculous. How anyone can pretend Australia has a land shortage beggars belief!

Some argue prices have arrived at a new and permanently high plateau, but the historical record shows reversion to the long term average – in every case without exception. I remind you there are 1.3 million Australians with negatively geared rental properties. They are diverting all rents and some personal income to meeting interest payment in the hope of capital gains. When only capital losses are expected, investors will flood the market and overwhelm demand. Buyers will step back, making it virtually impossible to sell at any price.

Do not underestimate the scale and significance of the transformation that is about to unfold. Price falls are imminent – protect yourself. Don’t Buy Now!”

So, does the movement has legs? Has it become a media darling? Or is it viral?

“As far as I know,” says Paul, “it has had very little or no attention in the mainstream media. Politically this movement has not had any mention, however the green party is beginning to talk about the housing affordability issue, so if it’s going to get mentioned it will probably start with the greens.  As for the public consciousness I think once again it is too early to say, but it seems sentiment is really starting to change anyway.”

If you want to know more, here’s the Prosper Australia page, here’s the Facebook page, and here’s an online forum kicking the idea around.

As you browse this material, think of all the dewy-eyed, hormonal, brainwashed young bovines who stampede to every new home sales trailer in Milton or condo project in Burnaby, snapping up properties in less time than it takes to choose a flattering thong (I know). As this blog’s pointed out, the tiniest of real estate corrections is enough to throw tens of thousands of unsuspecting young homeowners into negative equity. Worse, a protracted housing slump (and it’s coming) would erase their savings, destroy their financial futures and saddle them with debt without the prospect of equity. In short, way worse than rent.

Let me leave you with a couple of facts that cropped up in the last two days – reminders of what a housing correction can look like.

  • In the suburbs outside New York, it’s estimated housing values will recover – by 2020.
  • It’s now believed US realtors have exaggerated sales of existing homes by up to 20%, meaning the current market is worse than that of the Great Depression.
  • New home sales are the lowest ever. (Records have been kept for 50 years.)
  • Las Vegas had one of the hottest real estate booms six years ago. A home that sold for $240,000 is today worth $80,000.

Go to your television sets. Now. Turn off HGTV. Rip it from the wall. Fling it into the street.

Stand there, and scream: ‘We’re mad as hell. We’re not gonna take it anymore. I’m on strike!’

Buyers, not sellers, set prices. Pass it on.