There is little doubt that Australia's property market, particularly in the eastern states is at an extreme point. Whether this corrects sharply, or over an extended period of time remains to be seen.
What is clear though is the elevated level of Australian property prices. The table below featured in a recent edition of the Economist and shows the level of over-valuation relative to both rents and also relative to income. On either methodology, Australia's property market appears expensive and investors exposed to the property cycle either directly or by owning shares in building companies or property developers would be wise to exercise caution.