You're not paying enough respect to interest rates. For your exponential growth in house prices to continue, you'd want no rate rises. It's very easy to point to the last 12-13 years when mortgage rates began at close to 10% at the start of the interest rate cutting cycle and ended up at sub-2% (a lot of free kicks property investors have had there) and say that if you don't buy property you'll be poor. But if your plan is to borrow big now, I'd say that's a very risky strategy, with the real prospect of interest rate increases in 2022.
Sure, if the RBA is happy to watch inflation go through the roof and do nothing at all, then prices of everything will continue to increase and so might house prices, particularly if our government is to open the borders to immigrants as well... But house prices will definitely fall if the central banks have the guts to do their job properly, and raise interest rates in times like this, when it's needed. The price of essential items is going up rapidly. Many grocery items have gone up by 10% or more in the past few months. It's absolute BS to say that the inflation rate in Australia is 2.1%.
My view is that even if the RBA does nothing, and the US Fed raises rates twice by mid- 2022, the Aussie banks will have to soon lift interest rates as their borrowing costs will go up. They've already started to raise fixed rates. Auction clearance rates in Sydney and Melbourne are already at c.60%, down from 85-90% in early November. That's largely on the back of this and APRA slightly lifting the lending safety buffer on a mortgage from November 1.
