The Reserve Bank and friends have tried hard to slow housing prices down. They have charged SMSF borrowers punitive interest rates, restricted foreign buyers to new properties, eased some first home buyer stamp duties, limited interest only loans, lifted loan eligibility criteria and cut back some tax depreciation benefits.

But it has not worked.

Australia now has average household debt 190% of average household income. That’s an all-time high, and close to an all-time world record.

The Federal Government is worried. Its prescient futurists are taking about a polarized society, divided by home ownership, with intergenerational consequences.

Next step? Interest rate increases and blocks on negative gearing except for new property.

Does this mean Sydney and Melbourne residential property should be sold? Retained? Or bought?

These are the short-term forces. And in the short term anything could happen. Prices could stop rising. They could stay still. Or they could fall. No one knows.

But to be very frank and personal, you will not see me with my hand in the air at a Saturday auction anytime soon. It seems to be a bit of a bubble right now. Some silly things are happening. And I think it’s a good time to keep my head and my hand down and wait and see what happens.

But what if you have to do something?

What if you need to buy somewhere to live in Melbourne or Sydney? What should you do now?

First, take comfort that although no one knows what will happen to house prices over the next two years, it’s different once you throw it open to the next twenty years. Melbourne and Sydney housing prices will go up over the next twenty years, and they will probably go up by more than the inflation rate. This means most buyers will win over twenty years, even though there could be some sleep-ness nights in the early days, or years.

The dominant driver is population growth. Sydney, and particularly Melbourne, are growing at a pace. Melbourne is landing 110,000 new arrivals a year, plus some internal immigration. It does not stop. This time in five year’s time there will be another 550,000 new Melbournians (plus their new babies) and they have to live somewhere. They are well educated, well shod and very property aspirational.

So, over the next twenty years prices will definitely rise. The question is by how much.

Future home affordability is the big issue in every client meeting. Younger doctors are concerned about whether they can afford to buy a home, and if they can, where and how. Middle age doctors are concerned about how they can up-grade for the teenage years, and older doctors are concerned about how their kids will ever be able to own a home, and what can they do to help.

The game becomes easier and faster if the extended family works together. Soft loans from parents, and grandparents, to younger family members work a treat; rent-now-live-in-it-later strategies are very tax smart, and therefore very effective; “adjusted expectations” is a common counselling theme.

I confess to some pride that the Australian Doctor article circa 2001 “A home for every child” was followed by many clients, and it means their now adult children are insulated from home ownership stress. I recommend this strategy over and over again, and it has worked.

So, as you reflect on your next property move, remember property is a very long term asset. Its an inter-generational investment.

Filter out the froth, the bubbles, and contemplate Melbourne and Sydney in 2037 and again in 2067.

And never sell a good property.