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I'm still not convinced. :) I can see how things work from KeithJ's spreadsheet, though the the amount of money required to buy a 37% "better" house spirals upwards from around $90K in year 1 to almost $700K (including repayments to the mortgage) in year 25. The real term problem that I...

BV, I agree that lower interest rates improve affordability. The question is by how much. The economists' argument is that it's proportional to the interest costs, as any repayment is enforced savings. I'd argue that it should be the repayment costs. I suspect that a high inflation / high...

I think that people are missing the point. Take a look at the graph linked to below, which correspond to Australian markets. Sydney Melbourne Australia The graphs show salary multiples for the median house up the y-axis, and years (0 is 2000) on the x axis. Multiples for 2008 were pulled from...

If you take a look at a graph of the Herengracht Index then it shows significant volatility, but doesn't tend to sit on a trend line. I'd read the investment message in the above as buy property when it's cheap, sell when it's expensive, and don't expect capital appreciation to remain...

KeithJ, take a look at the Herengracht Index. If you haven't come across it, it's a very long term study over a period of around 400 years of house price movements on the Herengracht (or Gentlemen's Canal) in Amsterdam. What makes it interesting is that this has been prime real estate for its...

If inflation is around the 3% mark (with wages increasing at the same rate), and house prices increased by around 7% per annum (i.e. doubling every decade) then property is increasing by around 4% per year in real terms. Over a decade that would mean houses would become 50% more expensive...