There are a range of variables that affect house prices, including supply, the cost of borrowing and population growth. But probably the most confusing element at the moment is the UK government's housing policy.
Looking at price relative to after-tax income levels, house prices in Great Britain are currently over-valued.
The Economist's global house-price index has recently identified seven markets internationally which are over-valued by as much as 25%, and Britain is in the top three alongside Australia and Canada. Soaring prices in Great Britain have been caused by a number of factors. At the macro- level, low interest rates and low returns on government bonds are partially responsible.
The low interest rate environment has encouraged many investors to search for a higher yield elsewhere and thus investment flows have headed back to bricks and mortar. Housing has always been a default option for investors but it is nonetheless surprising just how soon after the financial crisis that the Great Britain housing market took off.
Thankfully, in Northern Ireland the housing market is really quite different to the Great Britain market so we have not yet been subjected to a second round of dramatically booming prices and rents in the same way as London and the South-East of England.
Supply is probably the biggest problem in Great Britain and in the government's recently published 'productivity plan' HM Treasury concedes that "the UK has been incapable of building enough homes to keep up with growing demand".
Admittedly, at this point, questions could well be asked about why house-building was even included in a government 'productivity plan' but from an economic perspective it is essential to keep examining UK housing policy regardless of where it pops up.
The new UK government has introduced some small housing policies in the July budget which are aimed at improving the supply of housing. For example, local authorities were given more power around planning and a new zonal system is also to be introduced to encourage more building on brown-field sites. But don't expect these small policies to change the GB housing landscape anytime soon.
The housing problem in Britain is currently being exacerbated by the fact that any housing supply side policies are being pitched against other UK government policies which are fuelling the demand side of the housing market. For example, the government's recent budget announcement that homes worth up to £1m will be exempt from inheritance tax will further encourage people to invest in bricks and mortar.
The Conservatives' pre-election 'Right-to-Buy' promise for council tenants will also put additional pressure on the supply of social housing and force many social tenants into the private rented sector where rents are higher.
The continuance of the Help-to-Buy scheme also adds fuel to the fire in terms of supporting demand and rising prices.
And finally, there has been much criticism of the budget announcement to impose a 1% reduction on Housing Association rent charges, which aims to reduce the government's housing benefit bill.
For housing associations this announcement was a huge blow as these non-profit making organisations traditionally use their projections of forward rental income streams to leverage borrowing. Their ability to borrow has now been reduced substantially and with £2.5bn less rent per year, the Office of Budgetary Responsibility estimates that housing associations will have to backtrack on plans to build 14,000 homes next year.
The National Housing Federation, however, estimates that 27,000 fewer houses will be built because of Chancellor George Osborne's latest policy. There were other measures too in the budget such as plans to require social landlords to charge higher income tenants a market rent.
But I guess at this point the reader is already starting to see how rising prices, rising rents and limited supply in GB are not being helped by Government policy.
In Northern Ireland, housing policy is a devolved issue, so there are limits to the damage that Mr Osborne can do to the Northern Ireland housing market. However, it should be noted that the local market is in much better shape than the GB equivalent when it comes to both supply of housing and price levels.
Despite the recent rebound, standardised house prices across Northern Ireland remain affordable.
There is of course variability across regions, with the outer Belfast standardised price in Quarter 1 this year reported to be £124,886, while in the North of Northern Ireland the standardised price was £102,115. In terms of affordability the picture is good. During the boom years house prices were more than nine times the median salary level; but house prices are currently 4.5 times the median level of earnings and massive price rises are not expected (or wanted) in the foreseeable future. Danske Bank forecastssuggest that local prices will rise by a much more sustainable 3.5% per year between 2016 and 2020.