[20分]Changes of interest rate如何影響Property Industry

Increase in interest rate will:
1) increase the opportunity cost in investing in property market, investors may divert funds to other investment opportunities, it will reduce the buying interest and also increase the selling interest, therefore, the property price will decrease.
2) increase the monthly payment for mortgage. Some investors may select selling out the property if they think that it is not worthy to continue the mortgage. Also, some of the investors may forced to sell out the property because they cannot afford the increased monthly payment.
3) increase the development costs and holding costs of property. Property developers may try to sell out the property quickly at lower price.
From these, property price will decrease.
Decrease in interest rate will:
1) decrease the opportunity cost in investing in property market, investors may divert funds from other investment opportunities, it will increase the buying interest and also reduce the selling interest, therefore, the property price will increase
2) more people can afford the monthly payment in mortgage. Therefore, property price will go up as more buying interest.
3) decrease the property development costs and holding costs. Property developers are less eager to sell out the property.
Therefore, the property price will go up.

Intrest rate increase will impact real-estate industry negatively, because a majority of home owners require a mortgage to pay for thier flats, so if intrest rate increase it will means owners will have to pay more each month.

Rumor of a intrest rate change will also affect housing sales, if rumor is for a rate increase people will rush in to buy houses to take advantage of lower rate. If rumor is for a rate cut, people will hold off buying houses because they will get a better rate later.

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