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

There are a couple of things that can drive up the price, and there are probably more than I list.

1. Housing crisis: in many western nations there’s a lack of affordable family houses or apartments. Shortage of supply means an increased price.

2. Inflation. Why not buy a house 25k more expensive now if it’s going to be 50k more expensive next year.

3. While the prices are still increasing, the increase probably slowed down because of the high interest rates, but didn’t quite reach a stall or decrease. A house that’s now 25k more expensive than last year might’ve been 40k more expensive than last year if the interest rates were still low.