I'm not disputing what you're saying I just think the return on property is pathetic and in no way commensurate with the risk,
there are two ways to look at property, One is as a place to live. I believe it is by far cheaper to Buy than it is to rent when you look at the long term picture of owning for say 40years compared to renting over a similar time frame.
Then there is investment.
I think property like any asset class can perform badly as an investment if you over pay. However, it comes back to expectations, The fact that I get weekly revenue from my properties, I control the cashflow ( no one can cancel a dividend etc), and the cashflow is likly to grow with inflation while the capital is also likely to atleast keep pace with inflation means I am happy to pay 25 times earnings, So what some people class as overvalued when they are comparing it to stocks may not be over valued at all.
I see a good property like a good Bond paying 4% that is inflation hedged, and has some good tax advantages.
The reality is that the risks facing housing as an asset class are centered around those who are in years 0-5, not the guy who is in year 18+ and has seen his income to service the debt rise threefold over the period since he took out his mortgage.
Yes, especially if he his funding the purchase with debt, But I don't think the effect of inflation is going away. And this kind of plays into the property investors hand.
I've seen stats that say 40% of them are in mortgage stress. It seems to me that it won't take much to tip them into default, they're probably only a couple of pay cheques away from it.
The same was probably true for the genius (your word) who bought 25 years ago, no doubt as rates hit 18% there was some pretty big mortgage stress.
The risk is of a large shock to the prospective buyer/new buyer from either unemployment, interest rates or inflation (I guess you could lump the baby sonic boom on its way into the mix too) means they can longer support the "ladder".
this is true, You will find though that I have never proposed people take on large amounts of debt to finance property, I always recommend low lvrs.
But also, commiting yourself to rent that $300K house for the next 40 years means you are subjecting yourself to payments of upto $2,340,000 over that 40 years, The cost of owning that home comes no where near that amount, Plus you end up owning a house.