warnie,like i said, median price is not a true indication of...

warnie,

like i said, median price is not a true indication of value. I am not saying they have fallen in the bum either, they are about to.

what to invest in at the moment is a hard one, I have little trust in most things over the next 12 - 24 months, however sticking with energy stocks as that is always in demand and running out of supply.

The thing is, a lot of money has been lost by the banks, because of this the cost of credit has gone up. this effects our banks as they borrow money over seas to lend to us.


Also subprime was a 4 year sleeping monster, ie honey moon rates dont explode till 4 years, August was the first tally of loss's from the first batch of subprime loss's so there is still anotehr 3 years of counting the loss's to come

this is all going to make borrowing money more expenisve. ie CNP and other stocks have been burnt by refinancing because of this.

And this is why all the AU banks are upping interest rates ahead of the RBA because the money they have borrowed to lend us now costs more.

Also as house prices go up, its not normally counted in the inflation figure, which i think is stupid because its the thing people spend a major chunk if not most their money on.. ie rent or mortgage.. so as a result the cost of everything else goes up, and wage presure to go up is applied also.

the RBA stops inflation because it make Australia poor, like I mentioned previously, if wages quadruple to catch up to housing then 1 British pound will buy $10 AUD and $1 USD will buy $4 AUD so we become very poor, so this cant happen either. hence why the RBA ups the rate.

so banks will up interest rates while the cost of credit goes up, and RBA while inflation is out of hand.

the end result is, and I am not saying these figures are acurate, but if you say a house hold who gross's $60K P.A their borrowing power before would have been $250K if interest rates climb and lets speculate a figure of 14% in say 3 years time.. that $60K house hold can only afford to borrow $120K now because of the cost of credit.

if the average hous hold income for australia is $55K~ then this means no one can afford to buy homes any more, and the people who are paying a mortgage can no longer pay their loan and forced to sell into a market that cant afford to buy..

this is why house prices will subside.. how much I honestly cant say, it all debends on the credit crunch and inflation. but housing has sky rocketd over 400% in under a decade, so there is a lot of room for the prices to fall back down.

remember everything runs in cycles, as a investor, you need to be aware what ever your investing in one day will trend into a down cycle and you need to get off and wait for the bottom again, there really has been no bottom of teh market for the past 10 years may have slowed down at one point, but house prices have not gone into a downward trend and the current market climent is going to be the catalyst to do this.