Originally Posted by
AndyD
I think the acid test of property prices is comparing them to what the build cost would be. They may have increased in value by a factor of 5 in the last so many years but if the build cost has increased by the same margin then they wouldn't be overpriced.
Provided there are vacant plots to build on in the area, most areas close to schools, shops, beach, view etc. are already saturated and prices are a lot higher than building the exact same property on the outskirts of town.
Many houses in the present market are priced at less than the cost of the plot + build cost so they would actually be underpriced.
This is a result of a glut of the particular type of property on the market at the time, prime real estate close to schools, shops etc, will not vary much during a bust but will definitely increase during a boom.
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