Hi Justis When I refer to an "over priced" market I'm speaking...

Hi Justis

When I refer to an "over priced" market I'm speaking about the median multiple of house prices to household income.

It's a good indicator to look at affordability - which then ties into whether a market is vulnerable to a correction.

Australia is now sitting at around 6.5 times combined yearly household income - compare this to 3.6 in the US and 4.3 in the UK, we're sitting pretty high on the scale.

We, as a nation, also have incredibly high household debt to income ratio. These 2 factors, can lead to a pretty epic mortgagee in distress situation if when interest rates rise.

I agree in supply and demand - it's what fuels any market; what I'm trying to highlight is the demand will taper (and is already starting to taper) off - which IMO will be the time to start looking to buy.

At the moment, you have a "frothy" market. Say a house is "worth" $1m - the agent knows he can probably aim for $1.1m, and knows there is a chance, if he has strong competition, he may get $1.2m.

This extra $100,000 is the "froth" - it's the excess on top of the usual demand. This will disappear as soon as supply is added back to the market.