Im not really a property bull or bear (though i am long) but as...

Im not really a property bull or bear (though i am long) but as intellectually satisfying as the wages to house price ratio is I think it fails to consider the fact that many people own more than one house.

The availability of credit as a currency has exploded since electronic money was introduced and financial technology has enabled asset based lending. It is far easier to finance an existing home using another existing home as collateral and keep the chain going. Wages : rents would seem to matter and in a financially repressed world they should go lower (rental yields lower)Wages : rental yields obviously support prices in a low int rate environment

I live in Sydney and given where prices are you would reasonably expect builders and developers to be absolutely flat out.....but.... they seem not to be because they cant get the things built in a cost effective manner. Speculators on existing stock are rewarded by both their existing collateral and by the tax system which lets them recoup their negative carry from other tax payers via negative gearing.

Without getting into whether this is fair or reasonable or equitable or not - I ''think'' the probabilities suggest we could go into a blow off phase of the bubble before the wage ratio mean reverts.....if it ever does.

Interest rates may mean revert ... they may not... in Japan they never did. I think before we see a housing collapse we would need to see higher mortgage rates....ultimately set by US bond holders who finance our current account deficit and price the banks own credit... and a population slow down. I think our governments will manipulate legislation to sell our housing stock to wealthy foreigners before this happens.

Not a great place for my children to grow up in but that's life