Most of the property bulls, will argue demand will fuel the market, however as my header stated demand does not equal affordabilty.
Case scenario:
if a renter of a 400k house (say in adelaide) cann rent it for $400 per week...thats all they have to pay...
Now assuming theyd ecide to buy thehouse...assume no deposit or say enough deposit to cover fees and 5% deposit...so say $25k .
Borrow 380k at 7% = $26,600 (interest only) Straight away you have an increase of $111 a week
Council rates , water, insurance etc will add say $60 a week....
So minimum they would have to find is $170 a week extra to live in the same house...so that in effect is taking that amount from their lifestyle living...
How many would pay that ??? That is the question...thate xample is on a cheap house it abllons out on more expensive proprty...
