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
Can’t speak to all markets, but in the UK:
Population growth outstripping house building.
Smaller household size (Increase in divorce etc) adding to the lack of houses.
Local authority housing being sold off and not replaced, reducing the option to rent and increasing the necessity to purchase to avoid…
Buy-to-let mortgages allowing small investors to acquire large property portfolios further decreasing the supply of houses.
Mortgage terms in general; 1970s was based on 3.5x 1 income. Thatcher allowed financial reforms that meant 2 people’s income could be assessed for mortgage needs (effectively doubling the cost of houses).
So, demand outstrips supply, purchasers have more credit to spend on houses and therefore prices go up.
(Edit: pressed ‘return’ too soon).
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