High house prices are unequivocally bad for the economy. It decreases consumer spending, excessively pushes our wage up (less competitive globally), increases costs for businesses etc. There would be nothing better than for Australia's economy to have lower prices.

However, they will not go down. Not in the next 5 years at least. Auction clearance rates are hovering ~90% in Melbourne and Sydney. Rental vacancies are ~4%. If you think $2m for an ok house in a nice area is bad, wait until you see Vancouver or Central London where an equivalent house will set you back $3/4m.

In truth, house prices are cheap - just not if you actually want to live in it as a PPOR. Generally it only costs $150 a week to own a $500k investment property if you rent it out at a bog standard 5% yield with NG, tax concessions and deducting maintenance costs against your income. However, if you're buying the house, paying the full principal with no other income plus interest then yes it's extremely expensive.

IRs are around 4%. We haven't even approached near 3%, let alone sustain rates <1% that the UK & US have been doing for a long time. We're also a small nation of 22 million, with highly centralised populations in capital cities. There are more multi-millionaires in Asia alone wanting to invest in Australian real estate. I'm not saying we're exceptional and our invincible RE market will forever buck all historical trends - far from it. But there's no reason to think it can't go even higher - especially if we have a huge amount of (untouched) tools at our disposal and the ability to open the floodgate to prop up prices to avoid upsetting the voters (most own homes or aspire to)

It's a ridiculous situation and I wish we were more proactive like Singapore, but that's the way it is - just try to get on the property ladder either by investing in property yourself or buy a modest place <10km from the CBD, which generally holds out well during downturns and are always the first to appreciate in price - and the fastest too.