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08-22-2012, 04:11 PM
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Originally Posted by opendoor View Post
So that's a 27% drop in buying power simply due to interest rates returning to their 2007 levels. Even if you accept that real estate isn't overvalued by a single cent right now, there's going to have to be a correction from the return to more normal interest rates given the levels of debt and low equity we're seeing right now.
Great post, you explain yourself very well A correction is definitely in order, though comparing it to what happened in the States is a big exaggeration. It'll be a slow correction as economies recover and interest rates rise, housing prices will stagnate or drop slightly. We aren't likely to see interest rates rise quickly, so it won't be anywhere near as drastic as it was in the States imo. We also have much tighter mortgage rules etc.

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