BayView thinks that wages will rise to meet property prices, I don't think this is possible for many reasons.
Can you show me where I said that specifically?
I didn't. What I said was that wages will always go up and so will rents and property values.
They all rise independantly of each other unfortunately, and as they do, they often balance out to a degree at various times.
For example, if say, the average rental yield for a suburb is currently around 2% (hypothetical), this would indicate that there has been a recent boom in values, and rents haven't moved in step with them.
As an investor, you'd be doing yourself a disservice to buy in that suburb right now. Homeowners probably wouldn't care, however.
The boom has ended; noone is buying, but wages and costs of living (rent) still continue to increase.
So, over the next few years after the boom, the rents will catch up to the house values a bit. Amazing, but true.
Finally; as I've said repeatedly - because I've been around in this game for longer than many of you have lived, I have seen how this always occurs. No speculation, no sliderules or spreadsheets; just observation of humans living on Earth.
The younger brigade haven't seen it yet, and are therefore more likely to have the belief that "property is way too expensive; how will we ever afford a home", "wages will never catch up these house prices" and so on. Their view is mostly the here and now, which is understandable.
But they always do...eventually.
Why? Couldn't tell yers, but this is what I have seen.
Here's another example just to bore yers a bit more; when I bought my first PPoR, it cost $87k. My g/friend and I bought it together, and it was a bit of a stretch.
Now, that same girl is earning $250k per year, and lives in a house in Kew worth about $3 mill with her husband. (We are not together as you can guess, but still friends).
And yes; it's a bit of a stretch for them.
