Blog > How Does Inflation Affect the Housing Market?
Inflation affects the housing market in two main ways: through purchasing power and borrowing costs. In my experience, when inflation rises, the cost of building materials and labor also increases, which drives up new home prices. At the same time, central banks often raise interest rates to combat inflation, making mortgages more expensive. This can slow buyer demand and temporarily cool prices. However, real estate also acts as a hedge against inflation because property values and rents tend to rise alongside consumer prices. For many investors, holding real estate remains one of the most reliable ways to preserve long-term wealth during inflationary cycles.
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