The fact that demand is now outweighing supply means a premature inflation of house prices such as that being experienced in Melbourne may be on the way.  Dropping stock levels have also seen a significant decrease in the average days on market and the clearance of some stock previously languishing on the market.

Interest rates were another variable in the equation.

Time will tell, but the spate of recent interest rate rises may have some impact on demand, but if it doesn't, it is likely rates will continue to increase. In fact, if the recent increase delivers a moderation in demand that is best case scenario for the market.

Interest rates and especially the dramatic increase demonstrated by Westpac will continue to influence and moderate market activity. Nevertheless economic and demographic factors in WA are again beginning to build significant pressure on the local property market.

The move by the RBA to increase interest rates was necessary, there are factors indicating that the market is getting out of control and any premature inflation in prices is not going to provide a balanced and sustainable market place.  In big picture terms the decrease in stock levels is a concern, because when housing affordability is impacted there is a flow on effect to all aspects of the cost of living. There is also the overarching issue of a major housing shortage in this country.

However the market was not currently in an accelerated pattern.

In WA those looking to buy and sell can go to market with cautious optimism, but it is likely that the first quarter of 2010 will continue to see affordability impacted.  Buyers can still buy fair at the moment, so there is no need to panic, just be aware that prices may be on the way up in the near future.

Sellers are at an advantage and are likely to get a good offer in a relatively short selling time if the selling strategy is carried out right. But pricing and selling strategies are still crucial; avoiding a fixed asking price  is a good option in these market conditions.