sixty minutes, page-73

Guys, Keene and others are looking at statistics with out looking at other market forces that have occurred in housing overtime. The major thing is that while houses have increased in price above the long term rate to earnings, but so has the size. I indicated previously that I had a builder friend who built some basic houisng - no ensuite, no games room, no granite, no speial features, just very plain and simple. could sell them as people were looking for their 'dream' homes. He tried to rent them out and found people werent impressed and preferred to pay more to get more.

On the Rudd thing last night there was this Chartered Accountant lady with her investment banker husband complaining about the saving scheme and they couldnt buy their dream home. Rudd said that the first home shouldnt be the 'dream' home, to which the lady corrected Rudd saying it would be. This is the reason why the PE average will in some places be higher.

The other factor that needs to be consider is the alternative of not owning. Professor Keene will be required to rent. As he is in Sydney he will be paying $400-$600 for similar apartment. People are prepared to pay these prices.

so the benefit to him is not that great and this will be a stabilising factor and is a factor of interest rates

I accept that prices will fall. This has happened previously and will happen again.

40% is right as it has already happened in parts of sydney, but accross the nation as a standard is not a given.