Housing shortage or not... it comes down to affordability....

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    Housing shortage or not... it comes down to affordability. People here seem to think that if the bank can lend you the money then it's affordable and if more people need a house than whats available then prices wont drop... right? Wrong.

    It's a flawed logic based on fantasy land interest rates and an assumption a 3 bedroom home 50km from the cbd, on a 400sqm block is actually worth the 1.1M and will continue to rise by 20% each year...right? Wrong

    Interest rates rising reduces peoples capacity to borrow. It's that simple. The government will move heaven and earth to increase wages, offer schemes and handouts but at the end of the day house prices will have to drop when there are not enough mugs left or able to sign up for crippling debt. Sellers can refuse to sell untill they are under mortgage stress and forced to do so. It's a house of cards.
 
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