Are house prices too high in this country

The hot topic within the real estate world at the moment is one you might think is a little disingenuous.  Are house prices too high in this country and can they continue to rise?

Well of course they’re too high will be the response of every hopeful househunter out there. Meanwhile vendors will acknowledge prices have been high but will lament that they’re not as high right now.

I think the question of whether prices are currently too high really is slightly odd.  They’re as high as people are prepared to pay.  Over-optimistic vendors expecting unrealistic prices soon learn the market sets the true value of property at any moment in time. 

At the moment house prices are holding but apartment prices are struggling.  I think that might be because houses are a very traditional market so people have more confidence in the rise and falls that occur in value.  On the other hand the high-end apartment market is relatively young here in Australia so there is less of a historical context for people to reflect on to determine long term value.

As for the coming months I have to admit that I am watching employment statistics very carefully these days as I see it as the potential biggest influence on the state of the real estate market.  If there is a significant increase in unemployment then I predict we’re in for some rough times ahead.

As for the longer term property values…that’s a more complicated question and one I’ll leave till next week to discuss.