Sorry I have to accelerate this as I need to get home.
OK, "too high".
What happens? Let's set up an unrealistic environment where supply does not slowly gain on demand before demand rises again (relatively speaking).
In this environment there will come a point where the market can no longer pay a higher price. Even though supply is not increasing in the face of ever increasing demand the price cannot rise simply because people CANNOT pay any more.
This is where you claim that we have arrived.
If we operate on the assumption that people want a roof over their heads and are not prepared to have their families and children sleep on the streets then there can be only one outcome.
They can't pay anymore, there is no more supply coming (thanks to our artificial constraint) and demand keeps rising, what happens?
What happens is what has happened in so many other countries. There are a number of things which happen.
1. The number of people per square foot of land increases ie people live more densely. No more "my space", no more 4 bedrooms for a family of 5, no more 4 bathrooms.
You start to see multi-generational households, you start to see families sharing houses and putting up with each other.
You start to see many more high-rise buildings rather than fully detached houses.
2. You start to see people who rent their whole lives and often in the same house. You actually see the children continuing to rent the same house their deceased parents used to rent.
3. You start to see people move to smaller towns. Perhaps the pay is less but the housing costs are too so the families become relatively better off. This leads to many cities of reasonable size (compared to the country's population) as opposed to a few cities of great size such as we have in Australia.
So as I have said many many times on Hotcopper, until we see enough people moving to other cities, until we see more people per square metre, until we see more people per household, the price of properties in Perth, Melbourne, Sydney, Brisbane etc will continue to rise regardless of any "affordability" question.
When it is no longer affordable then the social changes I have described will become a reality. Until we see them happening then it will be business as usual.
