Cannot argue with the Economics 101 aspect, nor can I argue with the underlying "the industry needs to work on its credibility" sentiments. However I'd like to put in a word for human nature, on both counts.

It may be anecdotal, it is certainly economically counterintuitive, but from my own observation property prices rise when transaction volumes are high, and slide when they are low. Certainly, when I bought the current family home, the vendor had been trying unsuccessfully to move it for many months in a slow market, and finally dropped the price in despair.

Human nature says "the market is slow, no need to rush", and competition for individual properties decreases. Human nature also says "the market is hot, let's dive in", and competition for each property increases, with the consequent impact on the price.

As far as the motivation of real estate agents is concerned, this will not change until we abandon the concept of the commission payment. It is all very well talking about "professionalism" and "integrity", but underneath it all is a bunch of ordinary guys and gals, with their own families to feed, trying to earn a crust. When the market is tight, they hurt. The temptation to "talk up" the market at every opportunity is great, the obligation to "represent the industry" is pretty low.

If you can find a way to remunerate them for demonstrating "high professional ethics", you will see an instant improvement. While you pay them on volume and value of completed transactions, you can depend upon them to do everything in their power to increase both components.

It's not surprising to see the Real Estate Institute of NSW Rowen Kelly drumming up the 'good' news on the potential rise in property value "We're looking forward to an improvement, especially with the abolition of the vendor tax and the reinstatement of the land tax threshold. Investors will start to return." It's just another instance of them giving wrong and misleading advice.
Despite the softening of prices over the last 2 years, Sydney property prices are still very high, and overvalued. It is well known it is overvalued, even by the Real Estate Institute. They constantly complain about the affordability issue of house prices, and yet constantly talking up the prospect of a recovery, and investors rushing back into the market. Rushing back in the market for what?!?, overvalued houses?. It's not something to rush back to when there is a potential collapse.
The issue could be a lack of responsibility and obligation that applies to Real Estate agents. They simply can recommend anything they like, and talk about the growth and growth of house prices, without the disclaimer that they may be overvalued, and potentially fall in value.
This certainly is not helped by the REI which seem to only like to talk about increasing house prices, and mainly shy away from the comments that prices are falling. Every now and then they come out to try to show they are not that bias by talking about the current slowing down of property sales, and house prices stagnating... then lastly signing off with their favourite message "Property is the safest investment of all asset classes, and over the long term has produced over 10% per annum". This is totally irresponsible, and really shows how 'professional' their industry is. If the Real Estate industry continue to talk up the market about increasing property value, and new property cycle, it is not serving their cause any good. Call a spade a spade, so that the housing market will cool down to their "real value", and allow normality to come back again. This may bring back some credibility to their industry.

Had a home and property behind the Gold Coast. As we were forced to sell we went to an agent -well known- in Nerang. He told us it was a buyers market.

That is it would be hard to get the price we wanted or what the home was worth.

So we went a couple of doors up to another agent and asked if a type of property, we described ours, was on his books.

He, looking glum, said unfortunately it was a sellers market at present. Meaning we would have to pay top dollars.

Many agents seem to be some would say crooks at the worst, or eager to do business at the best.

Of course re the above many are fools. numbat