Economic Growth vs Property Prices

Economic growth of a country is measured by GDP, also known as AD (Aggregate Demand) and National Income.

Real estate makes up 10% of the British GDP every year, which is £1.7billion every year.

Real estate makes up over 10% of the UK's GDP

An increase in Real Estate prices contributes towards this 10%, hence GDP growth. In other words, property prices going up makes the Economic growth look good.

Property Prices- Economy vs Society

Real estate inflation is evidently great news for the home owners, but not for others who are looking to (i) step on the property ladder or (ii) upgrade to a bigger home.

Other positive contribution of Real estate include providing 12 million jobs. This is good for the Economy as these people go on to Buy products and services, which then creates more jobs and contributes towards Economic growth (GDP). In Economics, it is known as the Multiplier Effect.

One could argue that Property prices going up are good for the Economy, but perhaps not so good for most of the society.