An economy that has low unemployment in it's labour market means that more individuals successfully find employment. Once income levels increase, so does demand for housing. Other links between the housing and labour markets include individuals seeking to relocate, in order to move closer to their workplace. Credit conditions are another important dimension when tracking housing demand.
This sub-section presents charts compiling selected indicators related to economic determinants of housing demand. While increased income levels boost housing demand, they do not necessarily cause housing affordability to improve. This is why we also look at how house prices have evolved, compared to earnings. Credit conditions are another important dimension when tracking housing demand. Here we present two indicators: average interest rate new mortgage agreements, which determine the cost of mortgage interest repayments; and the volume of mortgage approvals, which indicates the financial sector’s level of mortgage lending. Lastly, we look at the composition of buyers to identify the participation of different economic sectors when demanding new residential property.