I strongly doubt whether the increasing price of housing is sustainable. If it's increasing beyond that of inflation, it's a bubble and people simply just aren't going to be able to afford it. People on the upswing of any market become complacent that prices will always continue to rise, but this isn't necessarily true. The future is yet to be determined, and who knows what will happen.
I have known landlords who have had their properties vacant for several months at a time. Their mortgages continued though and this put a lot of pressure on them financially. There's also the issue of tenants that end up not paying, or paying late, etc.
You're not wrong and your strategy has a strong superficial appeal: property ownership with flexibility! Properties can be rented out, it's possible to find great long-term tenants, and it's even possible to break even or make a slight profit as an amateur landlord. Your strategy can be made to work, it's just the costs probably aren't worth it unless you're a landlord with a good number of properties. I'd argue the actual flexibility is marginal compared to renting; if I want to leave my rented property, I can do so quite easily and with minimal moving costs. I do appreciate the cost of this flexibility too though: I'm paying someone else's mortgage with nothing to show for it in the long term. Also, owning has the distinct advantage of control: nobody's going to be a more accommodating landlord to me than me!
[0] This assumes that the property is a second-hand dwelling, not one bought from a new developer, or been renovated, or any of the other exceptions that come to mind.
The reason I think there's still a bubble is that housing costs are increasing faster than wages. More and more of peoples' budgets are being spent on just protecting themselves from the rain and scorpions, and at some point this cost just becomes untenable and a correction, or worse a crash will occur as the market can no longer bear such prices.
I'm very skeptical when I hear someone articulate that prices must always go up in the long term because they have in the past. They might continue to rise for a while, but eventually ... pop goes the bubble!
Which isn't to say there is not a speculative bubble - the price of real estate may well be growing faster than it should - but just the fact that it's growing faster than inflation doesn't demonstrate this.
As a result, the price of houses in Australia is completely disconnected from the rental returns, and instead driven by speculators chasing capital gains, and/or income tax minimisation by engaging in negative gearing.
