The boom produced a two-tiered property market in many Australian cities, but the global financial meltdown has left almost everyone with a lack of confidence and a degree of confusion about how it will all play out.
Now Australia's housing market is made up of those who are fearful of seeing their investment decline and those who are hopeful that falling prices will soon enable them to get into the market.
For both buyers and sellers, the new bogyman is not inflation; it is not interest rates; it is unemployment.
And a good indicator of just how people feel will be the 1065 auctions in Melbourne this weekend. Last weekend, the number was about half this and the clearance rate was 57 per cent.
ANZ Bank says in its latest weekly economic outlook that there are tentative signs we are near the end of the financial panic.
But it says that may signal the start of the economic downturn.
Fujitsu Consulting, in the latest edition of its Mortgage Stress Survey, released last week, estimates that despite recent rate reductions, more than a million households could be in mortgage stress by March, a prediction that factors in further interest rate falls and expected rising unemployment.
Fujitsu predicts that the increased number of people in stress will lead to further house price reductions in many suburbs.
The ANZ now expects the Reserve Bank to take the cash rate down to 5.25percent by the end of the year and 4.5percent by the end of 2009.
Lower rates, the Rudd Government's moves to stimulate the economy, high immigration and a net shortfall of housing suggest Australia will avoid the hefty price falls seen in the US.
But a lot is riding on continuing robust employment and there are already signs of weakness, including job losses in the car industry and a slowdown in the labour-intensive commercial building industry.
Reed Construction Data, which researches and reports on activity in the construction industry, last week told the ABC's 7.30 Report that project deferrals were the highest it had seen in its 40 years of tracking the industry.
Deferrals were at 3045 this year, up from 561 last year. About half were in NSW and a third in Queensland.
Developers are finding it difficult to borrow for new projects and to roll over existing funding.
When projects stall, it has a knock-on effect on employment in industries that supply the sector.
Rising unemployment means fewer people are in a position to buy homes, but on the other hand a lack of construction means that the national housing shortage will not go away.
For buyers, the main question now is whether they feel secure enough to take on a mortgage. For many sellers, the big issue is whether they really need to sell.
Reserve Bank governor Glenn Stevens encapsulated it quite succinctly in an address to a Trans-Tasman Business Circle lunch last week.
He said that in Australia perhaps the long period of household debt build-up was now giving way to a period in which there would be some consolidation of balance sheets.
If so, household credit growth will not be as fast as it was for the past decade and a half.
"Perhaps we will also need to get better at turning borrowing for housing into more dwellings rather than just higher house prices," he said.
