Our Real Estate "Portfolio" consists of just two houses in adjacent suburbs. With the ridiculously high property prices in Sydney, it's amazing we even managed to end up owning two properties. The first one was an investment property we bought soon after we were married, at which time we were both living rent free in my parent's old house (they've moved to a "retirement" farm up north, and are in the process of renovating the old family home in order to sell it and help fund their retirement). We were lucky to buy the investment property just before the last Sydney property boom really gathered steam, but even so it consumed all the equity DW had from selling her unit and an equal sum from me to meet the deposit.

The Sydney property boom gave us a significant boost in equity, and this, combined a promotion and increased salary allowed us to purchase our current home. We had previously been toying with the idea of buying an investment unit in Queensland or New Zealand (both of which has since had property booms, so would have been good investments), so when my parents decided to renovate and sell their Sydney house it wasn't too much of a stretch to buy another house - with the minimum deposit needed to avoid paying mortgage insurance, and taking out a 25-year loan.

Soon after moving into our own home the Sydney property boom ended. Fortunately the suburbs where our properties are located only declined 5% or so in value, before levelling off. The past current months have shown good increases in the median sale price for houses in both suburbs, so it looks like prices may be starting to pick up again. Despite prices being very high, and almost unaffordable as a multiple of average weekly earnings, there is an undersupply of new housing construction in Sydney, and a shortage of new land zoned for development. This has started to force rents to increase, which is encouraging people to look at buying their own homes, even though mortgage interest rates have increased 0.75% since the start of 2006.

Our property portfolio is shown below:



A plot of monthly changes in estimated house valuations clearly shows the recent "boom and bust" housing cycle in these suburbs of Sydney: