Most real estate agents now have in-house mortgage brokers who arrange loans from banks.

Since the approval process is done through software, many homeowners end up getting loans with monthly payments of more than a third of their income.

As a result, mortgages have declined as a share of the market when interest rates have risen (after once accounting for nearly half of overall transaction activity).

In their place are cash buyers, driven by investors, who continue to see value in parts of the market. (The surge in cash buyers is a classic sign that prices are leveling off).

However, just like the spike in mortgage rates in other parts of the world, there has been a certain price fatigue in some areas as people realize that they don't want to pay top dollar, either in terms of sales or rents.

The recent changes to building classifications by the Dubai Land Department and linking them to rent increases will keep rents in check in some areas.

(Oddly enough, this is being witnessed with the increased demand for "demolition and renovation" properties, which was earlier limited to high-end villas in Emirates Hills and Palm Jumeirah.)

There is no doubt that the higher cost of capital will eventually affect asset prices, even if inflation leads to higher replacement values.

Realtors like to brag that real estate prices are relatively more stable than other asset classes, but this is not the case.

In the U.S., inflation-adjusted prices in San Francisco fell by nearly 40% between 1989-95.

In 2001, prices in Honolulu and Los Angeles fell by almost a third.

In the past year, prices in Austin, Texas, have fallen nearly 14 percent after more than doubling, and inventory levels are starting to pile up.

In Dubai, prices have risen sharply, but in most market segments, prices are still below their peak levels of 2008-09.

The recent pickup in inflation has made prices cheaper in real terms, (which is partly responsible for housing demand).

But, as anyone trying to hire a carpenter already knows, there is still a building boom going on.

In addition, since housing is more equitably distributed than stocks, the impact on the economy is greater in terms of consumption patterns as interest rates rise, and this then backfires on new purchases.

The differential diagnosis suggests that there is still value in most middle income brackets (e.g. Dubailand, JVC and Furjan areas), but nevertheless the overall pace of frenetic activity is slowing as listings and discounts offered begin to rise.

This will be felt in those areas where prices are rising the fastest as developers rush to offer higher priced products.

There are many who do not believe this argument, saying that: a) liquidity remains high; b) banks are well capitalized; c) foreign demand is sustainable given the demographic reforms that have taken place; and d) prices will jump further as China opens up.

All of these arguments are valid and, ultimately, housing investments will eventually pay off over a long period of time (similar to capital markets).

However, all asset prices are cyclical, and for those who want to make quick and easy money, they may find new meaning in the phrase As safe as houses.