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House prices and interest rates: More on house price fundamentals

Posted on 24 April 2012

Like everything else, house prices are set by supply and demand; but clearly, the supply situation in Ireland and Spain looks completely different from that of Britain. But demand is surely not an exogenous factor.
I would suggest there is a three-stage process; more people will want to own their home if prices are rising and that will reinforce the boom; at some point, however, unless lending standards are not completely relaxed, people will be priced out of the market and will have to flat share/live with their parents, and the bubble will pop; at that stage, as prices fall, defaulting borrowers will send more supply into the market until eventually prices are affordable again………………………………………..Full Article: Source


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Laxman - who has written 28515 posts on Opalesque Real Estate Briefing.


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