housing survey, page-80

OK hughes, valid point , nowadays we have 2 income families.

But

say 100k average income. The banks rule of thumb used to be and probably still is for a prudent lender - to lend no mere than one third - 33% of combined gross income.

The figuring was third to the government for taxes, third to the bank for mortgage repayments and third to live on.
so 33k to spend on repayment, taxes are bit lower so say 40k.

At 10% interest only this would buy 500k property with 20% deposit, or cheaper if our working couple have not 100k for deposit. they just can not afford anything more expensive, that is the position most young families find themselves in.

This only leaves them about 30 - 35k to live on, not exactly a live of luxury, forget the idea of having kids, they cost to much.

The only way out of this conundrum is if the inflation takes of. Their mortgage principal is fixed and if the inflation is ten percent and they manage to get pay rises in line with inflation, their position improves, providing the interest rates do not rise to much. They usualy do.

The value of the real estate also rises because of inflation and everybody thinks they are geting wealthy.
But it is just illusion. They just have more dollars that buys less goods.

If the inflation is kept in check, our young couple has a fair bit of strugle ahed of them.

They would be better of renting - rule of thumb in Sydney was that 500k place in Sydney would bring $500 a week rent.

This strategy would leave them 15k better of and they could posibly afford a child care for one child and odd cask of red.

That is why there is not to many milion dollar houses in Sydney, median price about 500 -600k and not likely to go up in a hury IMHO.

Brian