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Explain why a change in interest rates

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The origin of most booms in house prices is soundly based.

i. Explain why a change in interest rates, or a change in expectations for rent growth, can cause a difference in the (actual) growth rate of rents and capital gains.

ii. How do capital gains induced by a decline in interest rates, or a rise in expectations for rent growth, potentially lead to "irrational exuberance" in the market?

iii. How might rise in interest rates, or decline in rent growth expectations, impact on the housing market?

Reference no: EM132166741

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