Why is the cost of living going up, but house prices coming down?

Question

Surely if everything is increasing in price eg Fuel, food and utilities, house prices should go in the same direction. I read today that house prices have fallen again by 4.4% , who decides?

Answer 1

Food prices increasing worldwide due to biofuel.

Oil prices increasing worldwide due to war.

House prices in UK decreasing due to an over-inflated market.

House prices in US decreasing due to a silly game of pass-the-parcel that those Wallstreet idiots should have understood after Milken.

Answer 2

BECAUSE THE APPRAISERS GAVE A HIGHER APPRAISEL PER HOME FOR MUCH MORE MONEY THAN IT WAS WORTH, ABOUT 50% MORE SO THE BANKS LOANED OUT ACCORDING TO THE APPRAISERS REPORTS AND NOW THAT REALITY SET IN AND THE TRUE APPRAISELS CAME OUT. PEOPLE ARE LOOSING THEIR HOMES, BECAUSE THEY CANT AFFORD THE HIGH PAYMENTS AND IF THEY SOLD THEIR HOMES THEY WOULD LOOSE 50% FROM A PRIOR APPRAISEL.

Answer 3

Market forces - supply and demand. Food is going up because oil and food commodity prices are increasing because of (amongst other things) the rise in demand from the BRIC countries. House prices are going down because of the "credit crunch" caused by the sub-prime mortgage fiasco in the US. This caused banks around the world to make huge losses and so are less able to lend money at low rates especially to house hunters. Less buying of houses means less demand so decreasing prices.

Answer 4

If people have to spend more on the essentials of survival the price of houses on a limited budget (hard to say) comes harder to bear so the sellers who have been extremely greedy in the past are forced to bring down their prices.

Also speculators are finding more expensive to raise cash. After all they do not use their own money they borrow and expect a large return.

Answer 5

Prices are set buy the buyers, so because buyers have less money so prices fall. If we all stop buying fuel the price of that would fall too... simple supply and demand.. so could you all stop buying petrol for a couple of weeks so I can afford to fill my car up...

Answer 6

In simple terms, if people have to spend more on fuel and food, then they don't have the money to buy a bigger house. When no-one wants to buy something, the prices tend to drop.

That's a very simplistic explanation.

Answer 7

Consumers cannot afford to spend money on housing if prices of more necessary goods go up. Also, since house prices are weak, this means that very few speculators invest in the housing market, which further decreases the value of houses.

Answer 8

Greedy money lenders are the one`s at fault for lending to people who over reach themselves to buy something they cannot really afford.