The Sydney Morning Herald has an editorial on Australias housing bubble. "Evidence is mounting that the slump in the housing market has ended, with house prices rising, auction clearance rates increasing and rental vacancy rates falling. Is that what you're starting to think? It's certainly what your friendly real estate agent and the property developers would like you to think."

"But I doubt it. So does Kieran Davies, chief economist for ABN Amro. Mr Davies is sceptical that the rise signals a renewed boom because simple valuation measures indicate the housing market's still extremely expensive, despite prices having gone sideways to down for most of the past two years."'

"For example, if you compare median house prices with average weekly earnings, you find that the average price for the capital cities remains close to the all-time high reached in 2003. It's 9.5 times annual income, down from a peak of 10 times and still well above the historical average of 6.5 times."

"Or take the gross rental yield - the rental income (before allowing for expenses) expressed as a percentage of the market value of the home. It's off its multi-decade low of 2.7 per cent, but it's only back up to 2.9 per cent, compared with its long-term average of just over 4 per cent."

"Given that there has been so little change in valuations in the past two years, we are interpreting the recent rise in house prices as volatility in the data rather than a sign that the housing market is reinflating,' Mr Davies says."

"What's more, since prices remain so far out of line with wages and rents, he continues to expect a long period in which prices are on a flat-to-down trend until they achieve the usual decline in real prices seen in the aftermath of a house price bubble."

"It's still taking a long time to sell a home. In Sydney and two other major capitals, it now takes about 100 days to sell, up from about 40 days at the height of the boom. And home owners still have to discount the advertised price to achieve a sale, with the discount averaging 7.5 per cent."

"The increase in real rents nationally seems mostly due to the booming housing market in Perth, where both rents and house prices are rising at an extraordinary rate. And Mr Davies suspects the Perth boom will peter out later this year. At present, Perth is building as many houses as Sydney, even though there are three times more households in Sydney. So it's hard to see that national demand for rental housing is so great as to almost completely soak up this supply."

"No, the signs of the property market starting to recover don't really stack up. The recovery will happen one day, of course, but I wouldn't be holding my breath."