The property that today is valued at 460K will be valued at 400K in 6 months, and at 300K in 12 months.
Can you afford to lose 200K in the next 12 months ?

Sydney is probably the least problematic market of Australia.

Perth , Adelaide and Brisbane are the worst ones.

Sydney houseprices have been stagnant for 5 years ( due to them being overprices in the first place ).
In recession times, business goes away from Perth / Adelaide and Brisbane and comes back to Sydney / Melbourne.
So yes, if you have to buy somewhere, Sydney might actually be the safest bet. But keep in mind that houseprices will still fall a lot, so offer at least 20% less than asking price.

That said, there are not many young couples that are cashed up, so that is just hype.

If you sell your home your mortgage will be released WITHOUT COSTS.
Even if you had 20% interest rates, selling the house will NOT cost you a dime.

Well.. unless you signed with a dodgy bank or signed a dodgy contract.

Yes, and since then ( july 2008 ) things have gotten a LOT worse. The lowering of the interest rates has brought depression onto Australia's soil : The biggest mistake anyone could have made was to lower the interest rates.
They tried to save the property investments ( because they ( the policy makers ) own a lot of properties ) and by doing that they have forsaken their children's future and the whole nation.

Way to go, you have seen nothing yet. My predictions back then were dire ( and they came true already ) but my predictions now are even worse. Australia is in for a crash unlike any other country has ever had ( Maybe Iceland or Ireland can compare )

At first it sounds like a good plan. You seem to be able to make the payments and a house is worth whatever "the next fool will give for it" which in this case means it's worth what you will be giving for it. If you are comfortable with the repayments, then many people say you should go for it.

However, if this house is only a dream, why will you rent out your dream house ? Renters break a lot of stuff and if it's for the feeling you buy the house then you should consider this. It's like buying a new car with the smell etc, or you buy a car which has been smoked in for 2 years. Same thing, the car still drives but.. it's a bit more dodgy. Think of stuck up drainpipes, many drillholes in the walls everywhere, carpets broken, small firedamage in sometimes, the garden will be a big mess, the roof might be leaking and caused some damage inside etc.
That's what you get with renters. Nothing much you can do about it.

I would personally not buy anything until 2010. You are very veyr lucky to be in the situation that you cannot move out before 2010 anyway, so why would you buy now and lose 100's of thousands of dollars just to 'hold' something ? Something BETTER will come along, a detached house on the edge of a lake, you know the thing you really want ? Fishing from your back yard ? For the same price as this house now.

Think twice, think thrice, and if you are still thinking about it think again until you forget about it. By that time it will be 2010 and you will have SO many nice houses that you will think "man.. I'm glad I didn't buy that small townhouse over there, look at this detached house with 800 sqm at the lakefront… much better!"

Harb, you're still in the 'denial' phase my friend ? Most of your colleagues have already passed that phase and are now in the 'angry' phase. You mean to say that 10 to 12 times wages is not a property bubble ? Not to worry harb, you will get a big wake-up call very soon. ( Most people are awake already btw )

harb wrote:

Say it ain't so and prices have not doubled in the past 7 years.

Houseprices, under normal circumstances, double every 10 years. Noone said they don't.
The explanation is simple : Inflation. Everything doubles / triples / quadruples every 10 years. My income in the last 10 years has quadrupled for instance. Did I do particularily well ? hm… well no , everything has become more expensive in the meantime, so I'm not that much better off. Ofcourse I have a better job and I earn more, but overall, I didn't become richer by a factor 4. Maybe a factor 2.
So, what does this all mean ? In the last 10 years houseprices have gone up MORE than double. And this is exactly the problem. In some places houseprices have doubled, but most have tripled, quadrupled or even worse.
This will mean there's a correction coming, because unlike housing, the wages didn't quadruple. They didn't move much actually, hence there's a correction coming. Housing doubled compared to wages, and need to come down 50% now to get back to normal. Probably more because credit is not available anymore and people have gotten themselves so much in debt that there are less buyers without creditcards / huge loans etc.
We'll go back to the 'traditional 3* median income' which means median houseprices in Sydney / Melbourne will come back to 200.000 abouts. And perhaps we will overshoot the crash and end up like Detroit, but any less than 50% ( in real terms , inflation corrected ) will not be happening. By real terms I mean simply this :
Median houseprices = 4* median income.

And that's already on the top price. Usually I'd use 3*, I'll be on the safe side here, and only predict meager drops of 50% overall.