Dear Mr Pug, I read with interest the article posted and seem to think that there is a correlation between the property market here and the US and hence that prices in australia wont be going up.
As has been mentioned the US mortgage system is totally different. one problem is that once you walk away from your house, while the mortgage stays with the bank, you are basically blacklisted from getting another home loan. In addition, credit ratings- FICO scores are effected also. Even being able to sign a lease becomes difficult.
Growth in price of housing to me is, at the lower end detemrined by simple supply and demand with affordabilty as a sgnificant factor. However, once you leave the lower end, the price determination becomes a lot more complex and can not be explained by a chart. Why do people pay $20m for a home on one side of the street while much less on the other side. Hedges ave, gold coast is a prime example of this situation.
And this is where the debt falls into a heap in that the charts used by some are seemingly trying to explain all house prices.
Taking hedges ave or any over extremely expensive street, you will see the determination of price is totally unrelated to average weekly earnings.
for property investors, research to find these areas that are subject to other factors that determine value is where you make the above average gains.
To use a tent city in the US to justify that prices wont go up in australia is really difficult to comprehend
