Here’s a story about housing and snake oil.

Back in late 2009, there were two Sydney based couples looking to buy their first first home.

The median house price in Sydney in the March quarter 2010 (ABS data) was $583,000 and the standard variable mortgage interest rate was around 6.7 per cent. Each household was on a combined income of $95,000 a year, which was about average for those living in Sydney.

Couple 1 took the plunge, they had $116,600 in savings, and borrowed the $466,400 or 80% of the value of the house and moved into their median house. The repayments were solid, at $2,881 a month over a 30 year mortgage.

Couple 2 also had $116,600 in savings in 2010 but saw a series of high profile stories from economist Steve Keen, who was warning about a 30 or 40% fall in house prices as the Australian property bubble burst. He reckoned unemployment would exceed 20% and something akin to a Great Depression was almost unavoidable. Couple 2 continued to rent and put their savings in term deposits, fearful of their job prospects and waiting hopefully for the collapse in house prices before buying.

Fast forward to the end of 2016.

The value of Couple 1’s house is now $882,000, which is a neat $299,000 tax free gain from the purchase price. Following average wages growth and a bit more seniority at work, Couple 1’s household income has risen to $125,000 a year. They have been able to negotiate a mortgage rate of 4.5% and based on constant repayments of $2,881 a month, their mortgage has dropped to around $375,000. This means that the $116,600 deposit in 2010 has turned into just over $500,000 of tax free wealth in their house which they have enjoyed living in.

Couple 2 are still renting. They have moved twice in the period to different properties at great cost and inconvenience. With rents being a little cheaper than mortgage repayments, they held off buying too many coffees and smashed avocado breakfasts and put $400 a month, every month for six years, into their savings account. Their income is now $125,000 a year, the same as Couple 1. They would liked to have saved more than the $400 a month, but rents have increased by 28 per cent since 2010 which has taken up most of the increase in income. Their strategy of having money in term deposits has seen an average interest return of about $5,000 a year, one third of which has to be paid in tax. The sum of their savings is now around $170,000. They are still looking to buy.

In six short years, Couple 1 have $330,000 more wealth than Couple 2.

And Steve Keen?

Well, he’s now a Professor of Economics in London and seemingly the go-to person when journalists want a headline grabbing, high click story to write.

Keen still thinks house prices are going to fall by a large amount it’s just the timing that is uncertain.