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In the housing boom year from 2005-2005, there was a big fund of mortgage available in the market. Many bank were very keen to lend mortgage and allowed people to borrow money with the big potion with various choice (e.g.five time income). Moreover, bank required low deposit (e.g.100% mortgage) until 2007, there was the credit crunch of 2007, banks were struggled to raise funds for lending on the market. With the tighten lending criteria, bank required the bigger deposit to buy a house. This has reduced the availability of mortgages which impacted the affordable to buy a house.

Base on the research and the article, there are many factors that determine the housing price. I would mention the basic factors that people use to decide to invest their money on the house.

1. Supply and demand

As a simple demand and supply. If people can afford to buy a house faster than supply, then the price will go up.

2. Interest rates

Interest rates play big factor in determining the cost of mortgages interest repayment. If the interest rates rise, the mortgage company usually increase the payment and it also can impact the affordable to buy a house. Therefor every small changes of interest rates can deter people from buying.

3. Economic growth

If the economic growth, demand for housing tend to be good, also rising income is another factor that help people to be able to afford to spend more money on housing.

4. Demographics

This is a very important factor. It is not just the number of people but demographic changes (e.g. immigration, divorce rate), growing number of single people who live alone lead to increasing demand of house as well.

5. Location

This is another factor that help people determine where to get a house and if it is worth the money. it is obvious that each location has different price. For example, when you go to the hotel, ocean view is more expansive that mountain view. Not only a view, determining a house price by using location to make a decision such as neighbor, community or school (if have kids.)

Reference:

Home Guru. (n.d.). House Prices. Retrieved fromhttp://www.homeguru.com.au/house-prices/

Wikipedia. Causes of the United States housing bubblehttps://en.wikipedia.org/wiki/Causes_of_the_United_States_housing_bubble