Exactly, kingpin. Forrest Gump can see this future even if some can't. In the early 70s we were all use to the standard 13% home loans, but were not over-leveraged. Then we had the boom and we leveraged ourselves up to the neck with investment properties, me included. The good times would never end, we youngsters thought - Huh! Then by the late 70s interest had risen to circa 17% and the house of cards fell in a heap. The same dynamic repeated itself in the late 80s/early 90s. Todays dynamic is little different, but with one glaring change. Due to record lows in interest rates the leverage equation has been magnified by a factor of >X. Inflationary pressure will follow, and with it interest rates. The inevitable result will be a rise in interest rates of circa 2% at some stage down the track, which will increase mortgage repayments by circa 30%. Mortgage stress will morph into mortgage catastrophe. From a retired estate agent with 50 years experience I have no doubt that 'Ground Hog Day' cometh. The only question is when?
And for those who might counter with arguments of continued, high immigration to keep the ball rolling, consider that our government could change this policy tomorrow and cut it by half to allow our infrastructure to catch up. Always expect the unexpected.
