Quote Originally Posted by fungus pudding View Post
Using round figures, $500,000 at 8% costs the same as $1,000,000 at 4%. Second hand house prices will always settle around the median weekly affordable figure. Therefore doubling the interest rate will over-time, halve house prices. Halving rates will double prices.*
*Principle repayments will mean this is not strictly accurate - but it's a good rule of thumb.
Not too long ago in 2008 & 2007 mortgage rates were double digits. How come houses have not come down in price? Have you not considered the basic principle of "Time Value of Money" ? When you factor cumulative inflation over the years, houses in NZ have still become unaffordable.

The key reason money is kept in the NZ housing market is the tax free capital gains investors enjoy.