The wonderful thing about a free-market in action is that price changes have a causal effect on supply and demand. While many markets, especially the residential property market, are grossly inefficient, subject to government intervention and misrepresentations from vested interest groups, eventually, prices will return to their intrinsic values.
In recent years, the residential housing sector has experiences a dramatic increase in price. The oft-stated rationale for the house price inflation was due to an alleged housing shortage, which was caused by a combination of immigration, higher birth rates and reduced construction activity. The quantum of the price rise has been significant. The critical guide of housing price levels is the ratio of house price relative to disposable incomes -- this measure has seen house prices (compared to income) double in little more than a decade. Prices have also increased in real (inflation adjusted) terms -- as Steve Keen’s graph below indicates, since 1996, house prices have risen at double the rate of inflation: