The problem with this housing market is that there are a lot of contradictory factors - some suggesting the market is in a bubble - others that the market is sustainable or just slightly overbought.
My personal view is that the market is too expensive and has been that way for many years. Each year for the last 10 I have been wrong. It would be nice to be right one day.
FWIW my view is prices are high but sustainable with two income households. Loss of one of these incomes will really hurt and force sales. A healthy job market is more important than rising rates - as the govt has some control here either by berating the banks or allowing official rates to fall or a combo of both. All I can say is the market will be strong for next 2 years or so but if the China story fails or falters and mining investment in this country attenuates (which means rising unemployment) then I think it will all be over for the housing market for quite some years.
My brother is a small time residential property developer and he is quite anxious about house prices. In little ol' Adelaide the market just evaporates (in his lower end market) if he prices his stock above $450K. This seems to indicate a price ceiling is developing.
One of his 2 storey town houses which he sold for $380K 3 years ago is on the market for $450K and the seller will struggle. This is not a good investment when one considers the entry and exit fees.
