renting : dead money ?, page-21

Steve ,

I have no idea what your reply has to do with my previous post or posts .

Before I respond , I will ask you a question for the third time .

Where did you get the figure of 4 or 5 years for investor property ownership .

Now , back to your post about inflation and property .

Property investors ( not bulls or bears ) do understand inflation . That is one way of making sure that their dollars don't devalue as you would put it .

Just quietly , the increase in value is in the land and not the depreciating item that sits on it .

So , you have an investment vehicle that follows inflation ( unlike cash ) and in the last 20 years or so has actually outpaced inflation .
That investment vehicle is leveraged on your deposit ( or on your ppor ) and it's the leverage that makes the money .

You like to present yourself as some kind of financial expert . I'm just an average punter that keeps chipping away . It seems to me that I have a far greater understanding of property economics than you.

As to property prices and wages having a ratio of 3.5 to 1 . Who says ? Sure , there is a period where that factor applies but that doesn't mean that it lasts forever . If circumstances were to remain the same , then I would expect the ratio to remain the same .

E.g. Car prices in Australia used to have a price to wages ratio and was used as a measure of prosperity for many years . Eventually it became redundant . A new Holden Commodore was around 30k in 1993 . You can buy one now ( a much improved vehicle ) for only a little more . Why ? Because , for many reasons , circumstances changed . If it followed the ' ratio ' , it should cost 70 or 80k today .

You might need to get used to the fact that things change . Housing affordability is just one of them.