Sydney is really expensive. Entry level units in the middle ring suburbs are often above $500,000 and you can easily pay $1,500,000 for a standard 3 bedroom house in a middle suburb of Sydney.
So how you deal with this comes back to strategy.
You need to ask yourself: What are you trying to achieve over the short term, the medium term and the long term?
Let us assume that you wanted to buy your ideal Sydney home in 10 years time. To sit on the sidelines between now and then is a pretty risky move, as property markets may move a long way in any 10 year period, however as mentioned it may be restrictive for you to buy in the Sydney market at this time. It is worth investigating the entry points and investment perspective of property markets outside of Sydney, including regional New South Wales and potentially even capital city markets interstate.
Now the risks here is that you are now buying in a market that you do not know, that you do not understand, especially if you are going to be buying interstate.
So you need to get professional advice around it.
You need to make sure that the property that you going to buy is going to perform over the next 5 or 10 years so when the time comes that you are going to sell it to use that as a foothold to get into the Sydney market that it has actually gone up in the value and that you have not gone backwards in your pursuit of getting ahead.
So, I think people should buy as much property as they can comfortably afford. If you cannot afford to buy in Sydney, you should still be investing property.
NOW YOU GO BUY A HOUSE!!!