No person says, though history does dictate.

Now you do – by substantially increasing debt at the same time. Using equity from a small rural place to buy a small city place makes you more of a slave to the bank than just paying off a small rural place. And for what? To be part of the hustle and bustle with the cloud of debt looming over your head and choking you and your partner for the next 30 years? For some crummy apartment? Come on, our cities aren't New york, where people have been conditioned to living like that over the last 60 years. They aren't even Paris, where it is more organized and a little cheaper.

Our cities, our entire country, is in the midst of a housing bubble that is sucking the economic life out of it and future generations. It can't possibly end well now, our leaders have passed up every chance to pull us out of it gently. Who knows how and when it is all going to fall apart, I don't even really care anymore. I guess I don't even really care about spreading the message that its a trap anymore, either. Too much else on my plate ATM. Probably just typing on instinct.

I got a FHSA for me and the missus. Guaranteed way to turn 50k into 80k over 4 FYs, which is pretty good returns for a safe bet. Catch is it has to be used on housing or super in Aus.

If property does correct, it gives me a solid 30% deposit.

If property doesn't correct and stagnates, its still a 15-25% deposit depending where I buy.

If property continues to boom like it has in recent memory, then I increase my super funds or still have miimum deposit to buy something I know is overpriced if i decide to.

My gut is that by the time 4 years is up, Mrs ummester and I will be in a much better purchasing position than most punters in the country. I don't think the GFC is over or that Australia is immune to its effects (or China for that matter). Compound this with boomer retirements and Australian property is going to get increasingly hard to move over the next decade.

Nah, not yet. 2014 probably now. I took some of your advice, though. I decided not to buy in ACT. Will build my FHSA all the way up to 80 odd k (combined with Mrs ummester) and buy at a place we want to retire to when my LSL is due. Then, after living there for 6mths, I will put it up as a rental and use the tax savings to pay down the loan 10 years faster. Best of all worlds and should give me the option to leave work in 15 odd years. Good enough for me.

Now, I just have to find the right coastal town, with a heap for sale, that isn't going to grow too much over the next 20 odd years.

Of course. I've never denied that property is a good long term investment just that it hasn't been the right time to buy since I've been looking. End of 2008 was – when I was last making serious offers. But then the gubberment went and overstimulated the thing and now its heading for serious problems.

All the time:) You should try working for them.

That's not what I meant, though. The scenario where you use future rental income to secure a PPOR loan shows the buyer's mindset from the outset and that mindset is not in line with the requirements of the grant.

It is one thing to put some money down for a PPOR and get the grants with it and then change your mind later, as far as the bank is concerned. It is another for the bank to have recorded proof that the purchasing intent was never for a PPOR.

Personally, I don't recon the banks would consider it but it would be interesting to find out.

James,

If there is an under supply, why is stock rising so quickly of late? There is an under supply of homes advertised at a reasonable price, not an under supply of homes for sale.

All the FHB boost in 2009 did was majorly over value the bottom end. The top end still hasn't recovered and the middle is squished in, well, the middle:) Trouble is, if the bottom end starts to fall away, the middle and top will follow, even though they are much closer to reasonable value.

Devo,

Recent history has shown that property is the winner, not all history. And that is a recent history with sever market distortions.

I agree, however, that selling all of your property and putting it in cash is silly. Best to be hedged against either, if you are well funded enough, and have some property, some cash, some precious metal and some stocks – probably in 25% proportions of each to keep it safe

eloi – do some reading on the last great depression. Bills will become the last of your worries. People will learn to HTFU.

During the last Depression there was over 30% unemployment at one stage in Australia and many people got used to eating roos or rabbits full of buckshot every 3rd or 4th day.

But it isn't all doom and gloom. So long as the government can keep a lid on rioting, with actual resources being given to the populace (food, clothing etc) then people (generally) start to help each other out and share more often.

My biggest worry with a depression now isn't how to deal with an adjusted lifestyle but has the general populace become too soft and self entitled to deal with it? If the house of cards collapses now, the mental fallout in developed nations will be extreme.

Emotional stimulus has also been greater over the past decade (get in before its too late, prices only go up etc). Therefore, people have purchased more out of a fear of missing out (an induced form of security).

If stock keeps increasing, the pressure to buy now becomes less and less, as the opportunity for the buyer to low ball becomes more and more. The fear of missing out will also begin to subside and buyers will be less pressured to make a decision quickly and more able to let the implications of their purchase sink in before committing.

Nah, really:)

Don't you mean Baaaaa?

For the 50 odd years prior to the last decade or so, Australians could buy an average house on a quarter acre block in an area the local government had plans to fully develop for 3-5x average income.

What is unaffordable? Heroin junkies can pay for their habits but not much else.

Perhaps the question should be are current prices reasonable when compared to long term trends? And are current prices sustainable with a view to the wider economy?