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You are right, the information I posted agreed that FHBs are considering buying lesser properties to enter the market.

Of course this isn't the case, otherwise FHBs would not still be buying.... some are, some aren't.

In the past house prices hovered around 2-3 times income, then as dual income households became more common they jumped up to ~4 times. The jump up to 6-8 times income seems to have been supported by lower interest rates, relaxed lending and high employment. This isn't a permanent situation, but...

Ahh, so its only the high income earners who have lowered their expectations. I don't really have enough information to decide if low income earners have unrealistic expectations or just can't compete with other buyers in the market place. It is interesting though that high income earners are...

I agree too, I haven't read this whole thread, but from the posts I've read so far it seems there is an ongoing assumption that affordability is poor due to unrealistic expectations. Most potential FHBs know this isn't true. A recent ABS study comparing first time buyers from 2006 to 96...