What Triggers Property Price Increases?

MICHAEL AKKAWI

WHAT

TRIGGERS PROPERTY PRICE INCREASES?

House prices increase when houses are not built quickly enough to keep up with demand. This can occur for a variety of different reasons. For example, there may be low government investment, or a lack of available land. But what exactly causes an increase in demand for new houses?

Buying Homes With Debt

People often assume that the answer lies in overpopulation, but this does not accurately reflect the full picture. Most homeowners need to take out a mortgage to buy their home, repaying

the principal sum in instalments over a long period of time. Therefore, homes are effectively bought with debt. Demand for housing is therefore limited by banks’ decisions on how much

money they are prepared to lend. As long as banks continue to lend demand will continue to rise, as will property prices, culminating in ‘financialization’ of the property market.

MOST HOMEOWNERS NEED

TO TAKE OUT A MORTGAGE TO BUY THEIR HOME, REPAYING THE PRINCIPAL SUM IN INSTALMENTS OVER A LONG PERIOD OF TIME.

Property Prices and Politics

People tend to regard property price rises and decreases as an inevitable thing which cannot

be controlled. In reality, politics plays a pivotal role, with banking regulation, government investment and town planning all having a considerable influence on the market.

You can find out more about property investment by visiting the blog of Michael Akkawi.