Home prices... How much higher can they go?

Beazley can't afford home

If a bloke on $200k a year can't afford a home, what's that say for the rest of us? I've never understood the crazy prices that the eastern states have had to put up with. Some places are at least double what Western Australians would be paying for an equivelent property. It seems as though the crazy price hikes are slowing as buyers come to the realisation that it's hard to pay back a $450k+ loan on an average wage.

I was in two minds about buying a $400k home in Perth recently with my fiance and her brother because I would have a $90k loan, after enjoying a year debt free... The truth is $400k doesn't buy a lot of house when you move closer to the city (Our place is around 10-15mins from the city centre). Of course I'm expecting/hoping for a good return on my investment in a couple of years, but who's to say the market wouldn't have slumped when we need/want to sell.

It gets back to logicality... The average wage rises each year by a very small amount, while prices for properties increase dramatically. Even my old 3 bedroom home that I bought for $106k sold for $165k a few years later. I still consider property a solid investment, but it can't keep supplying the returns that it has been.