What Factors Affect Imputed Interest Rates?

The rise and fall of interest rate factors have a great impact on real estate prices. From a cost perspective, rising and falling interest rates will increase or decrease investment interest in real estate development, which will cause real estate prices to rise or fall. From the perspective of real estate demand, since the purchase of real estate (especially commercial housing) is now generally paid by loans, rising and falling interest rates will reduce or increase real estate demand, which will cause real estate prices to fall or rise. From the perspective of real estate value being the sum of the present value of the expected future return of real estate, since real estate value is negatively correlated with discount rate and discount rate is positively correlated with interest rate, rising and falling interest rates will cause real estate prices to fall or rise.

Interest rate factor

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The rise and fall of interest rate factors have a great impact on real estate prices. From a cost perspective, rising and falling interest rates will increase or decrease investment interest in real estate development, which will cause real estate prices to rise or fall. From the perspective of real estate demand, since the purchase of real estate (especially commercial housing) is now generally paid by loans, rising and falling interest rates will reduce or increase real estate demand, which will cause real estate prices to fall or rise. From the perspective of real estate value being the sum of the present value of the expected future return of real estate, since real estate value is negatively correlated with discount rate and discount rate is positively correlated with interest rate, rising and falling interest rates will cause real estate prices to fall or rise.

On the whole, real estate prices are negatively related to interest rates: if interest rates rise, real estate prices will fall; if interest rates fall, real estate prices will rise.