The problem is people dont understand the meaning of affordability, which is funny, since it is self explanatory. It always comes down to ''' but interest rates where 18% back then''' LOL, etc etc. Yes they were, but how much of your income was servicing that debt AND for how long- and we also need to be talking about TOTAL household income? I dont know in which utopia poeple think they can live in when they think of servicing 500K debt with a, lets say, above average income in a non-income producing asset like your own house. It creates nothing. I have nothing against people investing in whatever they want, go for it, but i do believe in common sense and expressing that opinion. I believe that in the short term you can get away with it, but for 30 years? when does it start to bite? Do people think that paying 18% interest rates on a 100K mortgage or paying 6% on 350-500K are so much different that the 100K borrow is the one with many more problems?-- well i for one dont think so. Do people on here not know the difference between percentages as opposed to the AMOUNT that is borrowed? Today we are not talking about JUST the current rates( for all we know they could go up 2x from these levels) but we are talking about the actual amounts that are borrowed as opposed to the average income. Figures that are far in excess of 'normal' income.
One thing that is always said about booms, is that they always last longer than you think. And there is always some sort of external trigger, and is the credit crunch one of them?
When house prices become unaffordable they will historically revert back to affordable prices at some point- is that not logical? or does property have its own little secret formula?, and i mean affordable to the average australian not james packer.
The other problem i have with todays scenario is that everyone is kingd^&* when it comes to property. They are just the greatest because they invested in an upwards flowing market and have made money, then they come on hotcopper to chestbeat thinking their on top of the world because they know everything (but in reality we all know most hotcopper posters are full of sh*&, just have a look at the MFS, CNP, RHG threads to see the number of posts/traders). I liked property until the chestbeaters came out.
The government is definately one entity that is having a great time with australias property mania
