Where I'm from (Canberra) the tide is already turning in terms of sentiment. Attended 4 auctions on the weekend and not a single person registered to bid. I'd say this is because that overall the properties were over valued as the " property always sells for a prophet" mindset seems to be set in concrete... for now. What was interesting though is that we have created a No Win situation for the economy.
Interest rates being so low makes big business tentative about expansion and investment; unemployment will begin to rise as well as GDP will fall off. This will then create a cycle of trying to save the economy by going into negative interest rates..a around and around we go..
If interest rates rise, as you have said, a mass of defaults will occur as most won't be able to afford the 1.2 million dollar property @ 5% interest. this will collapse the banks.
