Rose-coloured crystal balls

It wasn't much fun reading the recent stock market doom-and-gloom commentary in the mainstream media, given my fairly high asset allocation to stocks, and my use of gearing. It's far more enjoyable to read optimistic (from my point of view) predictions regarding Sydney real estate prices, such as that reported in today's SMH. According to the BIS Shrapnel Residential Property Prospects 2008 to 2011 report, Sydney will have the nation's highest median house price, of $650,000, by mid-2011 with real estate values expected to climb by 18 per cent during the next three years. This would boost the value of my real estate portfolio by $150,000 over the next three years. An additional benefit for owner's of housing is that rents are also expected to increase substantially over the next few years. And the icing on the cake is that interest rates may have peaked as the Australian economy comes off the boil, and banks may gradually pass on lower borrowing rates as credit conditions recover over the course of 2009.

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