Reference to Sydney and Melbourne markets.......perhaps I bailed out too early from Sydney market When Crazy Becomes “The New Normal” By Steve McKnight Last weekend in Kew, a leafy inner-eastern Melbourne suburb, a house sold for $4.8 million. That’s not particularly remarkable on its own, as the area is well regarded. It’s near great schools and has many classy homes in it. What did catch my eye though was: It wasn’t a McMansion but rather a pull-down job; and It sold for $1,700,000 over reserve. Think about that for a moment… $1.7 MILLION over reserve. That’s a crazy amount of money and it is easy to be blasé about it. Yet $1.7 million is about $2.8 million in before-tax salary, and at Melbourne’s current average annual salary of $60,000, it equates to more than 46 years of work – a literal lifetime. Wow. This is just one example of how the Aussie real estate market, particularly in Melbourne and Sydney, continues to defy expectations. How high can it go? Will it crash? How will anyone under 30 ever afford a home? A simple measure applied the world over is ‘when the average person can’t afford the average house, then a correction is coming.’ Yet many local and international experts have prophesied a dramatic fall in house prices. All have been wrong, so far. Supported by generous tax concessions for owning loss-making property, and fuelled by low interest rates, property prices keep going up, and up, and up in most capital cities (Perth being a notable exception).