"Last week BIS Shrapnel came out with a report suggesting that Australian house prices are tipped to enjoy 20 per cent compounded growth or more.
That suggests the average Melbourne home will cost a massive $1 million in 12 years (and it would be enough to put RBA chief Glenn Stevens in the funny farm, given he has repeatedly warned of the dangers of a property bubble).
If BIS Shrapnel is right, in 12 years first homebuyers will be committing $6500 a month to mortgage repayments (assuming a 7.25 per cent interest rate).
I caught up with leading independent property guru Louis Christopher from SQM Research who threw cold water over BIS Shrapnel's predictions.
"The growth in housing has to be matched by a growth in income. If incomes don't rise, all it means is that we've taken on more debt and that's not sustainable long-term.'' (In 2002 the average home loan was $154,400 _ today it's $270,800)."
