I received a flyer from a real estate company and it says that there is an exhibition this weekend. The real estate being promoted is North Shore Views, at St Leonards, Sydney.

Now the brochure says that this piece of property has been around for 10 years and every year the net return is 6 - 6.5%. Net return means free of body corporate fees, council and water rates and maintenance cost management fee. The property is freehold and costs only A$293,000. In other words, you are getting A$18K per year on a freehold property in Sydney located near the famous harbour for peanuts? Then why the real estate company would want to promote to us if it is really so good?

I think the point to note is this: if the property has been around for 10 years, it should command a price of more than its current price, especially in today's climate. Right now, you have to go at least 20 km out of Sydney CBD to get a house at around A$300k. This kind of property is the cash flow positive type where you get good returns but more or less stagnant capital growth. There may be some restrictions when you sell or it may be difficult to sell. It may be an apartment that is leased out by some corporation.

Sydney is set to become a city of renters with research showing a household income of $145,000 is now needed to pay off the average house - far beyond what 75 per cent of families earn. The Labor party blames the "relentless" rise of interest rates for putting pressure on families struggling to keep up with mortgage repayments. It says there has been a $599 increase in average mortgage repayments from eight interest rate rises since 2002.

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