House prices are determined by a number of factors – some of them are economical while others are intangible factors such as the feel of the neighborhood.
First of all, if the demand for houses increases faster than the supply of house, the prices will naturally go up. In order for house prices to decrease, the demand for houses needs to fall or the supply of houses needs to surpass the demand. The demand for houses increases when people start to earn more due to economic growth. Earning more allows more people to afford to buy more houses thus increasing the demand for houses. Demographics are also responsible for house prices. An increase in the levels of migration results in a higher population which in turn results in a higher demand for houses.
Location is one of the most prominent factors that determine house prices house prices. For example, houses that are located closer to the beach or closer to transport are higher in prices. Houses located in city centers are much higher in prices than houses that are located rural areas. This is because most people choose to live close to where they work. Since that most people work in city centers, the majority of people will also live in city centers thus increasing the need for houses. (more...)



