Cycle seems to go: -Interest rates drop or money becomes easy -Rush of investors taking advantage -New buying presure push's prices up -As prices go up buyers get priced out the market and forced to rent which fills the extra rentals being bought -Price ceiling gets hit when Wages restrict future price growth -prices get irratic (like now) -People start to struggle with debts (like now) -jobs start to go making it worse (like now) -number of house's for sale increase above average (like now) -number of auctions inrease (like now)
-Something then triggers a big sell off * Interest rates rise * Enemployment levels falling * renters struggle with payments hurting investors * Too much time without capital growth * or Some other trigger
-Investing in housing loses popularity which means less investors with bigger buying power buying, and more FHB's with smaller buying power.
-Hose prices start to tumble -Rent prices start to fall in line with house price fall -Investors start losing money as borrowing costs go up as rental income falls.
-Then even bigger sell off starts and correction come into play.
-Banks start losing money on defaulters that sell below buying costs.
-Banks loan book starts to look risky as loans are larger than a lot of the homes purchased.
-Lenders to banks up interest rates to factor in risk.
-More people cant pay their mortgages..
and before you know it, prices are back to reality, where everyone can buy again..
