Crashing is a bit too strong a term I would say. If you invested 12 month ago in the ASX200 you’d Still be in front. Same can’t be said for Sydney real estate.
I can only offer a few thoughts:
1. If your investment horizon for buying a house is less than a couple of years then the volatility of stocks probably means it’s not a suitable investment for you at this time.
2. If your investment horizon is more than a couple of years then the best time to invest is today. Time in the market is a more consistently reliable strategy than timing the market. Buy and just forget about it.
That being said, I am in the camp of those that believe that there is a higher probability of interest rates rising in the next few years, rather than staying as they are or decreasing further, and this will be a very very strong headwind to growth in stock prices (and company earnings), and especially residential real estate, in the short to medium term.
But, even though I have this view history tells me that most probably I will be wrong, my crystal ball is not at all reliable, and so I just keep accumulating assets in the confident belief that when I look back 20 or 30 years from now it will look to have been a great decision in hindsight irrespective of the short term noise that may or may not impact prices in the next few years.
In relation to residential real estate in Sydney or Melbourne, if I was a first home buyer I would be careful. I see it as a slightly different situation to stocks as a first home buyer is likely to be 80-90% leveraged, meaning that even a correction of 20% could wipe out 100% or more of the buyers equity, which could become dramatic if a sale is forced (eg: divorce, relocation for work etc). If I was a first home buyer I would still pursue my ambitions of home Ownership, but with interest rates so low today I would want a 25% deposit - just in case I have to sell in the next 5 years.