Buying Housing When You Can Afford It

There are always going to be people speculating about everything whether that be the weather, the sharemarket or the housing market.

Are we going to twiddle our thumbs and let them dictate our behaviour? Are the economists ever right with their interest rate guess work? Did any of them forecast the GFC or were they gobsmacked and blindsided when the GFC unfolded?

According to Dent's speculations, he recommends Aussies to sit on their hands and twiddle their thumbs for two to three years before buying any property so that the 'deleveraging' and 'property bubble bust' can unfurl and unleash their misery on us poor hapless folks who currently own property or will be soon owning property. Stuff that.

What happens IF instead of property prices crashing 50% as per Dent's speculations, it instead goes up by three years worth of typical inflation? It simply becomes even more unaffordable and most of us will simply be priced out.

Australian Property Monitors reports Sydney's July quarter median house price to be $639,484. On that basis, I'm going to apply the average 3.5% inflation that we've had for the past few years:

End of year 1: $22,381.94 inflation, $661,865.94
End of year 2: $23,165.31 inflation, $685,031.24
End of year 3: $23,976.09 inflation, $709,007.33

That's three years worth of inflation equating to $69,523.34. So what IF the property crash didn't happen and instead, prices went up by inflation? You'd be paying $69,523.34 more and what IF property prices went up by more than inflation?

All these 'what if' scenarios. I could sit here until the cows come home, continuing to speculate but based on history and what older generations keep telling me- we should just buy property whenever we can afford one.

Simple as that. Buy property or stocks when you can afford to. Buy for the long term.

Even for those living in the US or Europe or wherever - if you buy property when you can afford to, does the housing price crash really matter that much? It's providing a roof over your head and if you're a saavy property investor, you would have bought rental property that provides reliable rental income. Just because property prices crash 50% doesn't mean the rental income will correspondingly fall by 50%.

There are no guarantees in life and you could choose to wait, and wait and then wait some more but before you know it, life may have passed you by and you could end up realising that you've been on the sidelines and that nothing is affordable anymore. I'm going to keep tabs on this post and Dent's forecasting and see in three years time what the future holds. Sure I could be crying about having lost 50% but then again, I'll take my chances given our property market history.