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These wouldn't affect the compounding effect I have highlighted. Even if it did, lets adjust by a factor of 1000 even, how many houses in London are selling today for 1,237,940,040,000,000,000,000,000 pounds??

One key consideration is that people won't be able to get insurance for floods in flood prone areas, which will mean they can't get loans, as banks won't lend against an asset which isn't insured and is high risk. This alone would send asset prices down in a hurry.

No that is the expectation for the individual, who is now 7 years older and has more experience. The person who is 7 years less experienced than you, trying to buy an equivalent house to what you were purchasing 7 years ago hasn't received any additional salary.

This is all a big lie that I have seen many times and heard property spruikers use on a regular basis. Lets say that extremely conservatively, property prices in England were on average only 2 pounds 900 years ago. Assuming that property prices doubled only every 10 years since then, that is...

I think you will find that for many, the price of land has caused their decision to go for a larger home. Let's say you are building a new house on the outskirts of Sydney. You could have a 130 sqm house on 400 sqm for $500k or you could stretch to $600k and have a 260 sqm house. For the...

The new suburbs that these houses are being built in are further out of CBDs and therefore in cheaper areas than those built previously. The average land size is also now much much smaller. 300-500 sqm is the norm, 1/3rd to 1/2 the size of blocks houses were previously built on. One offsets the...

This graph shows the changes in workforce participation (blue line) and household debt as a percent of disposable income (red line). http://www.moneymorning.com.au/images/mm20101115b_lge.jpg The changes in working demographics are not that significant when compared with the amount of extra debt...

As long as there is relatively low vacancy rates, my thoughts are that rents would remain relatively stable, even if house prices dropped significantly. Have a look at some of the rental returns in USA at the moment, in some areas house prices halved, but rents remained relatively constant...

Both rents and mortgages are capped at what people can afford to pay. One of the dysfunctions of the current market is the imbalance between what it costs to pay the interest on a mortgage vs the cost to rent. Typical returns here in Sydney are 3-4% while interest rates are 7-8%. Rents...

Here you go, this is Melbourne, Sydney is worse. http://www.simplesustainable.com/topic/2463-melbournes-median-house-prices-vs-wages-1965-2010/

I have purchased 3 properties in Australia. I purchased 2 in Melbourne's West which would have been twice the price in an equivalent location in Sydney and appeared great value. I have since onsold one under a vendor finance deal and will be onselling the other for a significant profit this...

40 years ago house prices were at the historical norm of 3 times average income, so house prices have clearly outpaced wages by far too much to be 8 times average income and in time must revert to the historical norm for them to be affordable again. Seems the same rose coloured glasses worn...

Me too. Is your boss going to be paying someone else twice what you are currently paid to do the same job in 7 years? You will be lucky to get 4% per annum when gaining additional experience in the same job.

Property prices continuing to double every 7 to 10 years is an unrealistic expectation. The only way that this could happen is if we enter a high inflation environment, because houses in Australia are already overpriced and people cannot afford to take on more debt unless their wages increase...