Two excellent snippets from.......http://www.smh.com.au/opinion/society-and-culture/house-prices-on-shaky-foundations-20110308-1bltu.html
"The Noosa experience has shown that Australian housing prices are not immune to basic laws of investment. As the price of an asset rises, its yield will fall. That means, to justify the higher price, the future income associated with that asset must also rise. That has not happened with housing."
AND,
"This is because the increase in house prices since 1994 has not been driven by higher rentals (or higher household incomes), but rather, purchasers using more leverage to pay more for the same asset. While income from property has more closely tracked higher household earnings (as it should), the underlying asset has increased in price by a far greater extent. That is why net yields on housing in capital cities are about 2 per cent – far lower than the return one can receive in the bank."
