Australian house prices are some of the highest in the world: according to the IMF, only Belgium and Canada have a higher house price/income ratio.
And they're still going up. Here’s a chart showing the house price increase in four major Australian cities since 2002. (Note that it doesn’t show prices in absolute figures, but as a ratio of where they stood in 2003-4.)
Quarterly house price index, with 2003-2004 taken as 100 per cent. Data was not available for Melbourne. Source: CityMetric Intelligence
In terms of price, Sydney’s properties are the most expensive – the median house price in July 2014 was A$812,000.
In terms of growth since 2002, however, it’s Perth that’s miles ahead of the pack. The explanation lies in Western Australian mining boom. For the past ten years, Perth's minerals and petroleum industry has grown by an average of 15 per cent a year, mostly due to rising demand from China. That industry has created jobs, raised salaries, and attracted international buyers to Perth. Research from Savills Australia has shown that the rise in house prices is in direct correlation to the increase in mining employment.
There’s another factor at work: low interest rates. Investing in property offered a higher return than keeping money in the bank, so those who benefited from the long economic boom spent their gains on houses. Their gamble has so far paid off. In 2000, Perth's median house price was less than A$200,000. Now, it's almost A$500,000, and the Real Estate Institute of Western Australia has predicted it'll rise to A$600,000 by the end of 2014.
Prices in Perth have, finally, started to cool: this might be because the Chinese market is slowing and there's less demand for their petroleum and minerals. And in June, Moody's, the credit-ratings firm, warned that the real-estate market in Australia as a whole may be overheating: in Sydney, house prices have jumped 16 per cent in a single year. That said, increased property prices have not so far led to a construction boom: constrained supply may make a full-scale property crash a little less likely.