To gauge price direction supply and demand needs to be looked at...

To gauge price direction supply and demand needs to be looked at in market terms not people terms, as you would a regular stock or commodity ie how many sellers, how many buyers and volume of inventory available for trade. At present if you look at a place like WA with an inventory of 20000 properties, ~1500 new listing per week and ~1000 sales per week, obviously supply in the market is outstripping demand significantly, and things are only just starting to heat up.

The supply demand argument is poorly understood and frustrating. When discussing property with someone who has a bullish outlook they will fall back on this all the time - "but what about supply?". What about it, every bugger in Perth is selling their investment property, that is market supply right there.