How do rising house prices affect the local economy?

Inflation interpretation of the existence of a surplus is based on simple principles contained in the supply and demand laws of demand, these laws it was decided that - for each item separately - the price is determined when the draw demand with supply .. If overeating happened in demand - it is a gap between demand and supply arise, and lead this gap to raise the price, and narrowing the gap with every rise in price even disappear completely, and then the price settles this means that if overeating occurred in the demand for any commodity, the interaction between supply and demand, the sponsor of this treatment over by high prices.

This simple rule that explain the dynamic composition of the price in a particular commodity market can be generalized to a range of goods and services markets, which handles the society just as the excessive demand for one commodity leads to raise the price, the excess demand for all goods and services - or the bulk of them - leads to high general level of prices and inflation, this is the case.

Higher property prices is a secondary relationship, was caused by external factors. More interest in the local market could be translated into higher property prices. More interest in the local market could be caused by creating new workplaces (factories, mines, ports, etc.)

Local governments should support right infrastructure for development. Property prices will not raise without better roads, accces to electricity, clear water, telecommunication lines, schools, hospitals, etc.

I agree that higher property prices means more people willing to live there, means bigger demand for all products. Prices of local or delivered products will raise. On the other hand it is a big chance for citizens, for creating new businesses and employment. Bigger local growth will back in higher taxes, accelereate the prosperity of the region.