[jacquesm]

It's a combination of many factors. Restricted supply of new homes is one very large one, ridiculously high rents, ridiculously low interest, preferential treatment for tax reduction on account of a mortgage further reducing the net interest paid and so on. Even after 2008, arguably the largest drop in house prices here in a very long time the market didn't drop nearly as far as it could have on account of everybody being locked in to their purchases and unable to move to something else until the market loosened up again.

It's a pretty tricky situation, everybody knows that the market is overvalued but as long as supply is this constrained and prices remain high buyers are left with very few options.

If the interests go up to something reasonable again (5-10% or so) there will be a lot of people in trouble but it won't immediately lead to a price drop unless investors move away from the buy side. This is especially true for apartments which are going for crazy rates because investors buy them up as fast as they hit the market. A typical property is for sale less than two weeks, and usually on the day it goes up for sale there is already a waiting list.

[selectodude]

It seems like most of Europe currently has issues like that. Sweden had to recently pass a law capping mortgage terms at 105 years. The average mortgage term for a time was 140 years.

https://www.thelocal.se/20160324/sweden-limits-mortgage-loan...