Why housing prices are going up, despite higher interest rates

 

From The Economist:

Three factors, however, explain why housing markets have so far brushed off higher rates. 

1. Increased Demand: The pandemic seems to have made people more hermit-like: they work from home more and spend relatively more time on home entertainment than on going out. People thus place a higher value on their living space, raising demand for housing. 
2. Fixed-rate mortgages: Between 2011 and 2021 the share of mortgages in eu countries on variable rates fell from nearly 40% to less than 15% (although some of the rest are fixed for only a few years). The effect has been to delay the impact of rate rises. Since 2021, the average mortgage rate across the rich world has only risen by half as much as the average central-bank policy rate. 
3. Richer Homeowners: Following the property crisis that began in 2007, many governments introduced tougher regulations, shutting out less creditworthy borrowers. Richer folk find it easier to weather higher interest bills. In addition, many borrowers are still sitting on large “excess savings” accumulated during the pandemic...