Today’s ABS score of the average established house in the state capitals jumping 5.2 per cent in the December quarter and 13.6 per cent over 2009 will do as an illustration. And remember that the best of the first-home buyer incentives were already washing out of the market in the December period. Annualise that December quarter figure if you dare.

Perversely, it’s the promise of a housing bubble that is sucking investors back into the market as well as panicking would-be owner-occupiers into taking the plunge. And it’s the reality of a housing bubble that will help force up interest rates.

It's not only Crikey that's claiming a looming housing bubble. Here Michael Pascoe argues that the three major property monitors all show an over-heated market. And that will lead to interest rate increases.

The question is, what advice are you giving to buyers and sellers?

Here's something I just found on Crikey.

The report says that, despite a slow down in first home buyer activity, Australia's property prices are too high. The author wants a 0.5% increase in interest rates tomorrow.

Australia is in the middle of an emerging bubble in housing. There should be no quibbling about a percent here or a decimal point there or trying to excuse the sharp rise by arguing that it followed a fall in the first half of last year. The reality is that they exploded across Australia in the past six months of 2009 and finished the year on a surge.

Figures from the Australian Bureau of Statistics confirm today that showed house prices jumped a huge 13.6% in the year to December, with a rise of 5.2% happening in the December quarter alone. The September quarter’s increase was boosted to 4.4%.

What's happening with the market in your patch? What would your advice be to the RBA?