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
I’d counter with a question: do house prices ever go down? Or do they just not go up as fast?
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.
Interest rates are a factor, but not the only factor. Household income and willingness to pay also play a role, as does housing supply.
If you have income and willingness to pay go up, and supply go up, and interest rates go up it’s then a juggling match between those factors.
I’m willing to bet that volume is way down. Fewer houses changing hands and fewer housing units being brought to market.
There are fewer and fewer appealing investment options for big investors so the big guys that are geared to do real estate are going all in on rentals, so the supply needs by recent graduates and stuff is met by overly expensive rentals in places where jobs are available (mostly big cities).
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