I'll answer this as I understand it. This is historical when we had capital gains, this likely will not work in the next 5 years+.
Let's use $300 per week rental as an example. Costs of home ownership are $600 to use a figure.
Renters pay $300 per week and do not invest the difference as they cannot afford to.
Home buyers are paying $600 per week on interest, rates, repairs and home ownership costs, but drawing on equity via re-financing credit cards and ancillary items over the life of the mortgage, lets say to the same tune of $300 per week (of course annualised).
I see so many people who got onto the property wagon early, I paid $250,000 for my house is 2001. Borrowed $200,000 as a FHB.
No my house is worth $650,000. Way to go. Ask them how much there mortgage is - how about $500,000.
These guys may still have made money doing this, but only due to strong capital gains. Take that away some homebuyers are toast.
How many people borrow $XXXX and repay it over time, never increasing it (renovations notwithstanding).
