Originally Posted by charly

No one has mentioned the bank rate.

Today it's at 1%, I believe, this is fueling a massive spending spree and personal debt mountain the US not the world can afford.

So if the bank rate goes to 2% the cost of buying a house goes up, the price people can afford to pay, the only thing that governs house prices, drops. The effest are thousands of people paying out loans of say $200K on a property that is worth $150K. Plus people who simply can't afford the repayments and have their home reposessed by the bank.

Everything else is fluctuation, the bank rate and economy is what governs house prices.

Look at the housing crash in the UK for a good example of what happens.