It really amazes me how people are placing their whole future at risk by purchasing such overpriced property, especially in Sydney.
The amount of debt you have to take on just to buy a house in Sydney is truly terrifying, even from an investment point of view.
This begs the question have people pondered what if Interest Rates rise? The media and real estate agents focus on supply and demand that is true to a certain point, however the biggest factor that determines property prices is Interest Rates.
I have seen this first hand when I was buying my property in 2008 and Interest Rates were almost 9%, people were fearful to bid and I was lucky to purchase a property for the same amount a similar property next door to me sold for in 2001!!
Once the Interest Rate cycle turns, and it will turn, then you will see a wave of defaults and people will be losing their homes. I guess its human nature, money is cheap to borrow so we borrow as much as we can to buy that house we have always wanted or that investment property that gives us a 3% return. Problem is that house is not yours until you have the deeds which could take 30 years or never judging by the way prices are going. So in effect you are renting your home from the bank charged as Interest until it is paid off.
Australia is like an animal in the middle of the road at night looking into a trucks headlights as it approaches, that truck people is the debt truck that will economically pound us and we won't even know what happened.
