Jazz I agree it is a short term solution to the problem.
Long term probably the best thing for generation y or x to get into housing will be to deflate the bubble
was just trying to do some calculations
if housing were to fall 40% then that would probably be enough to wipe out most peoples equity in houses
if you did that you'd wipe out 60% of wealth in australia
I think in the US and the UK they would be looking at losing at least that
the knock on effect to rest of the economy would be massive wouldn't it?
my calculations are based on these facts v v v
"The latest Real Estate Institute of Australia housing affordability report says that, while the proportion of family income required to meet home loan repayments was 39.8 per cent, only 25 per cent of family income was required to meet rent payments.
In June 2008 the Australian weighted median rent for three-bedroom houses was $316.10 a week, while the national average loan repayment in June 2008 was $2177 a month, or $544.25 a week.
Taking these figures, the saving on weekly repayments alone of $136 could be used to build up other investments or put away to build a deposit to buy a house."
just a back of the envelop estimate
average house = $500,000 average debt = $300,000 equity = $200,000
debt to equity = 150%
house prices would have to fall 40% before all the equity in housing is wiped out
