I was trying to sell a new 4x2 in Perth at the time of the 18% interest rates. It was listed for $230,000 and sold for $185,000 as the market tanked.
Let's call it a $200,000 home with $40,000 equity and a $160,000 mortgage. $160,000 at 18% = $28,800 a year in interest.
Now we have a $1,000,000 home also with 20% equity and an $800,000 mortgage. $800,000 at 2.5% = $20,000 a year in interest.
Average wages are more than 3 x what they were then so you can depreciate that $20,000 to $6,500 a year to compare in real terms, making that lates 1980's mortgage rate more than 4x the current cost. Even a lowly $100,000 home would have been twice the cost of the easy money being thrown at the spoiled buyers in this fantasy world of almost free money.
