Was about to hit the sack before I saw your post, all reasonable argument but there is a glaring line in your post which I must address before bed, the rest later.
"I would compare the Australian property market to a company with a good track record of earnings growth, that is subsequently priced on a high PE (ie 30..."
See there is the fundamental understanding which is lacking, there is exactly the problem, why you can't see what I see.
In a single word, choice.
The purchase of shares in any company is a discretionary action, I can choose not to have shares in that company or any other.
Can I choose not to house my family? Sure I can choose not to own the roof over our heads, I can choose to rent but I cannot choose to have no roof over our heads.
Can you not see the implications of that ever so simple fundamental point? Can you not extrapolate from that simple fundamental to its logical conclusion?
If the number of individuals is increasing in our cities. If those individuals are reticent to share, and if they do share, it is temporary. If they insist on premises of a certain size. If the planning and zoning laws contain the available land within an artificial boundary.
What is the logical conclusion?
Think about it.
They must have it, it is finite in supply and the demand is ever increasing, what is the result?
The only way it will change is if we have declining demand and I don't mean less people at auctions, I mean less people.
As to average cost vs average income, don't get too intent on averages, they are misleading. I really need to get to bed but I will leave you with an average that is absolutely correct and indisputable but in the end is misleading.
