Financial guru Scott Pape has warned Australia's housing bubble is set to burst, and Australians 'wouldn't want to be up to their eyeballs' in mortgage debt when it does.
Pape, better known by his handle The Barefoot Investor, wrote in his blog this week that interest rates which are currently at record lows 'will rise and when they do, they'll burst the housing market bubble'.
Australian house and apartment prices have seen dramatic rises recently, with a 22.2 per cent rise in the year to November, the fastest annual surge since 1989.
Housing prices have surged up 22.2 per cent in Australia in the year to November with tough competition for buyers to secure a house (stock image)
CoreLogic data shows the value of homes across the country has increased for 14 consecutive months in a row, with the average median value increasing by $126,000 in the last year.
Australia's median property price of $698,170 is now so dear an average, full-time worker earning $90,329 would be in mortgage stress, even with a 20 per cent deposit.
That's because the Australian Prudential Regulation Authority considers a debt-to-income ratio of six of more to be dangerous.
In Sydney, house prices have surged by an even more dramatic 30.4 per cent in the year to November, taking the mid-point to a very unaffordable $1,360,543.
In his blog, Pape answered a question from a reader who asked why they were finding it so hard to buy a house.
'My fiancé and I both earn good money. We have a healthy deposit and budget and want to buy so we can start a family,' the reader said.
'We've offered more than they were asking and been told no, the vendor took a cash offer instead.
'I obsess over realestate.com, ringing as soon as something comes up, only to find it was sold while waiting to be uploaded to the site.'
They added they have rung real estate businesses for help and told them they are pre-approved first home buyers, but the agents just don't call back.
'The dream of owning your own home must be feeling like a heart-crushing unlikelihood.'
Barefoot Investor Scott Pape (pictured) said the housing bubble would burst and Australian should be wary of borrowing too much on their mortgage
Pape responded by telling the reader not to give up and that he believes the housing market bubble will eventually burst - and with it housing prices will drop.
'I have no crystal ball, and picking short-term economic moves is
