The development of an economy largely depends on many factors. Several factors right from an individual’s income to national GDP have a lot of effects to play on it. Rising market recession and growing Inflation, by and large, affected almost every sector. The recent economic downturn has severely influenced housing prices. It hit so much that many houses were left unoccupied for several days. Is it beneficial or drawback for the economy? Let us explore this in brief.

In a way than one, the housing sector influences both micro and macroeconomic problems. It is a significant sector which defines the economic status of people and the economy as a whole.

The rise in average rentals and house purchases:

The average prices in major cities are standing at nearly 2,30,000 USD. This event is more in some areas depending on the field. One of the main reasons for the increase in housing prices is the easy availability of money. Of late, there has been a lot of mortgage loans available to people to buy homes. This acted as a massive spur in the rise in housing prices. Banks started extending mortgage loans for more extended periods and increased their asset value. With an abundance of money available, there has been a lot of demand and thus increased prices click for more info.

Rising Cost of Housing

Benefits of rising home prices:

The rise in home prices increases tax revenues, which will be beneficial for the government for developmental activities. This way, Governments can work on resolving the budget deficit. Stamp duties and other duties help in the rise in economic growth.

The rise in prices gives a sense of positive note to builders giving rise to new construction of houses. This will boost their profits and adds directly to GDP.  The areas around the regions will have a positive impact because of this, and the overall growth is expected to leap.


The rise in housing prices is becoming increasingly burdensome to mid and low- level income groups. Owning a house which was once a low- cost affair is gulping almost half of a person’s takeaway. If it continues this way, consumers will be left with very little money to spend on other essential expenses like education and health.

High prices result in more significant rents also, which will stand a substantial hurdle to geographical mobility. People are bound to stick to a single place where rents are low, and this hinders average growth of all areas.

There will be the possibility of recession if prices go high because there will be possible difficulty in mortgages.

Although there are certain advantages with housing price hikes, it should not grow at alarming rates. This may result in economic instability.