Answer to Question #245595 in Microeconomics for KTG

Question

Why have Canadian house prices increased so quickly this year? And what is a possible solution to slow down house prices to make homes more affordable? Make sure to use concepts from our course in your explanation.

Answer 1

the Canadian house price increased this year very quickly because as the demand is the constant and the supply is came near to zero . In a simple phenomena of supply and demand chain, as there is more gap in demand and supply, the prices go up.

Second reason is very low interest rate of housing sector in the pandemic situation.

In order to take the prices of the housing sector down it is very important to increase the supply. This could be done by expansion of cities and the area near them.