You buy a house for 500k...property drops a measly 10%, you are down 50k. It cost you 16k to buy, you are down 66k, if you want to sell thats another 16k, you are now down 82k. Already a 10% drop will wipe 16% off the price you paid for your house. problem is when the housing market does turn really sour it will be like the stockmarket, there will be hardly any buyers around, if you have to sell in a hurry well then good luck. For house prices to get back to avergae levels based on rental returns you are looking at around a 30-40% drop. Those who think thye will just put their renatl repayments up are dreaming if the economy goes south or rates rise, people will just not be able to afford to pay higher rents. Labor will then get voted in and kaboom...goodbye the easy life. Take big Johns advice and get out while you can, better to be safe than sorry and still have a happy family.
