We have visited this subject before.
The costs of an average new home in our city,s, or a second hand one.
The amount of debt people take on just to own a home.
Interest rates are likely to go even lower, does this mean bigger Mac Mansions, bigger debt?
How long are interest rates likely to stay low.
What will be the effect of say higher rates and stalled wages if the world economy continues to struggle.
Home owner ship in Australia, near city,s at least, is getting very much harder.
Will the Bubble bust, if so when.

The biggest challenge I see for housing will be the governments tinkering with Suoer, whereby they are considering outlawing lump sum payments, in favor of a weekly pension instead, much how it should have been from day dot.

You see nowadays, many will continue to borrow, knowing they can pay out their loans with their super once retired.

Similarly, one can borrow from their bank, say a 30 year loan, at age 40, as the banks know the loan can be paid out.

However, if super changes this way, lending may well tighten, esspecially the loan terms, which in turn will increase repayments, which by the way is what affordability is all about.

Interest rates in my view are less important and, the bank chooses whether or not to pass them on and, they can also put them up at will.

I know of no plan, no thought, to change super that way, yet.
We can before retirement use some super as a deposit.
But this problem stands apart.
No matter the fate of the mining boom, maybe even a return of the GFC, housing borrowing is a danger .
Saw figures and will look to post them if I can find them, saying our housing prices are, by comparison higher than America.
If we remember America found trouble by lending, under a different system, to those who could not pay.
Here the house and loan stands in default cases but every default sees less value for the house, after a tipping point is reached.
Unnoticed by most, houses have been repossessed for 50 years.
But not in the numbers possible if things go wrong.
Safe as houses? maybe for some a re think is wise.

My strategy was to keep buying up houses/land and at one stage I held ten properties.

Unfortunately an accident meant that I had to sell half, however, my wife's and my strategy is to hold all until one reaches sufficient value to pay out our borrowings, so it's a waiting game for us.

My tip is that prices will rise, as corporate debt is at an all time low and, the stock market is risky given the uncertainty of the economy.

Investors will continue to invest, as negative gearing is a better option than tax.

Furthermore, the less affordable houses become, the demand on rentals grows and, as long as governments assist with rents, property (residential) will continue to be a safe investment.

As for changes to super, watch this space, as a change here may well see more investors entering the housing market, as holding onto cash may well become an unattractive option.

http://www.propertyobserver.com.au/residential/as-the-australian-housing-bubble-bursts-prices-could-fall-a-lot-further-than-people-expect-steve-keen/2012053054914
An interesting link link.
One of many if you goggle Australian housing bubble.
Rechtub your plan once, maybe still was/is a plan for wealth.
Renting those houses you would think, as it always has been , is a sure way to profit.
But our market is much more complex than say the 1970,s was.
Overseas buyers owning big portfolios.
And new arrivals buying at big prices.
While it would be against history, and note my link is from May this year, I think prices may fall.
Housing investment is not exclusively in the hands of Governments.
No investments I know of is shock proof.
China seems threatened by thousands of empty buildings including one room flats.
I will post more links, but any single investment that puts all the eggs in one basket must remember the internationally trading world can impact even on this country.

http://www.smartcompany.com.au/property/049478-abs-figures-show-australia-s-housing-price-bubble-is-bursting-steve-keen.html
I get no joy in posting such links.
But in reality we face a near certain busting bubble in housing.
Our Lucky country may well find the negative side of the mining boom to and soon.
Our high dollar has forced manufacturing off shore and even to a stop.
We, for this harvest at least, before the returning drought, may do very well out of grains.
But as our dollars value falls, over all a good thing in my view, investors may bring about the over inflation too fast.
Winners will be found, but too great loss as our housing follows the developed world, and busts.

I can only hope we are giving more thought in real life to this possibility.
While our National debt, Government that is, is not as bad as some would think.
One of my links, maybe not one I posted, says our personal household debt is 90% of GDP.
It, if true, must have been very much worse not long ago.
The GFC has had an impact on our spending and borrowing, but not all of us, some are exposed to the smallest movement in world markets.
A day, it would seem looking at history,come that see,s double todays interest rates, and maybe near double unemployment.
It maybe decades away,or months.
I see noway out of our housing bubble, other than bust and pain.

The creation of Australia's housing bubble is not because of high or low interest rates, but by the ridiculousness of residential housing being seen as wealth creation rather than providing safe and secure housing for the population, with the bizarre added addition of renters not being seen as assisting in this wealth creation, but as second rate citizens who should fall on their knees with grattitude to be allowed to pay ridiculous rents.

As my said: Australia's housing bubble created by the mum and dad investors. Australia's houses are overpriced.

Let's start by allowing home owners to offset their interest against their tax, as happens in other parts of the world.

Yvonne, rents today are actually cheaper than they should have been, had returns on investment remained on track of the late 70's early 80's.

Back then, rents would return about 10% to the owner, whereas now, 3 to 5% is the norm.

As for our
house bubble, I simply domt think the market will crash. I say this because with rates at all time lows, combined with hand outs for 1st home buyers, anyone who wants a house should have one.

The trouble is, most domt want A house, they want THE house, and that's why so many don't own.

What they do own is a nice car, one or two plasmas and plenty of other goodies, which, along with the $300 to $400 weekend parties, takes away their ability to fund a home.

But once again, as I say most want THE house.

The reality is, $400 per week rents a reasonable house, but buys a crappy one and people have been spoiled with new homes being built simply for tenants.

Yes to Yvonne and in part to Rectub, my thought is that those wanting to own a home, may think lower interest/repayments make now that time.
Unfortunately we are investing in every thing, and always have in houses and land.
Giving both a very bottom value, I see noway that should change.
Rents? without investments, given government retreat from public housing, we would see many without homes.
I am for home owner ship, but affordable not Mac Mansions.
My links did not represent 1% of those that are there to be seen.
And some are living in housing bubbles right now, having paid prices they will no see again.
Sydney is seeing homes of fibro go ,or did, a million plus, position not quality.
Former workers, and the poorest of them, terrace houses bring well above that.
A bubble for all can come over night or in years or decades, but truth is some find theirs every day.
A busting bubble? yes for sure but when?

http://www.smh.com.au/business/australias-growth-straight-jacket-20121010-27c0m.html
A true shame we could not get interest in the theme.
Only that because it may well be looming on the horizon for us all.
I am far from the only one concerned.