I may be an ammateur and sold a lot of my properties before the recent boom, but one thing I know is this. If interest rates were still 11-13% I cant gurantee that properties would not be the prices they are today. It all comes down to affordability.
If the bank says you can buy a house worth $300k based on your capacity to repay then you have to look for a house in that bracket. If we get increase in rates as is looming, people repaying power is diminishing and so what amount the banks will lend is also diminishing. So sellers will have to lower prices to match the buyers affordability. The buyers would pay more if the banks lent more, but I see a credit squeeze looming, and this will have a domino effect, on all those people heavily geared in property etc. Think what you like but I am 43 and retired, so maybe my financial decisions havent been all that bad, I argue with lots of people who are still working 60+ hrs per week and owe lots of money on properties, but in their minds they are right and I am wrong. Everyone to their own.
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