yes higher than average ratio of earnings to house prices has been maintained, but in a climate of low interest rates (until recently) and high employment.
40% drop from current levels IMO unlikely (again talking about the Perth maret here mainly)
A drop of 40% in average prices from the peak in late 2006 when some properties are already down 20%+, not out of the question.
Especially considering interest rates will remain high and may even go a bit higher in the near term
Banks are tightening up lending, had one client tell me the other day his bank want a 40% deposit or he needs to pay mortgagee insurance.
and any move by the government to help with the current housing shortage and price problem will have to (unless they make a complete stuff up) involve increasing supply at a lower than current cost.
Buy property now and yes it is a safe bet it will be worth more in 15-20years
but there is a good chance you could buy a similar property for less in the immediate future.
Just as there is a good chance most will be struggling to make money on property puchased now, in the short term.
