How are average house prices in most Western countries rising, even while interest rates are increasing?

Question

I’m a layman, not an expert by any means but wouldn’t interest rate increasing mean spending, including buying property, decrease? Would that not mean that house prices would fall to intice more spending?

I understand currently interest rates are normal zing or falling but hasn’t this been the case for many years now since COVID lockdown?

In: Economics

Answer 1

Lack of supply. Even if there are fewer buyers who can afford high prices AND higher interest rates, there are also way fewer homes on the market. Anybody who doesn’t absolutely have to move isn’t going to give up their 3% mortgage to take on one at 6.5-7%. So it seems that only new construction, homes of elderly who died/moved into nursing homes, or people who absolutely need to move due to relocation or massive family changes (twins) are selling.