Buy a property that you can afford

How much should a person pay for a property? This is an important question. So far, there is no guide on this matter.

When property prices goes up, too many people spent too much money on buying a property thinking that it will go up forever. When the property prices reach a ridiculous level and falls from there, it can cause a lot of problem to the financial system.

I suggest that the limit should be:

> 7 years of the breadwinner's income
> 5 year of the combined family income

If one spouse is working with an annual income of $40,000, the limit should be $280,000. If both spouses are working with an annual income of $70,000, the limit should be $350,000.

In working out the guideline, I have taken into consideration the percentage of income that goes to service the housing loan, the repayment period of 30 years and the long term level of interest rate, and future increase in earnings.

I hope that this gudeline is useful for most people You should not exceed the limit. It is all right to buy a property below this limit.