For thousands of years human society had both poor and rich people. Poor people would often blame the government or the wealthy for their misfortune. But if we look closer it this particular situation, it’s the opposite for a lot people. They become poor because of incompetence and sometimes unfortunately because of the government and the wealthy. In this article I will discuss reasons behind government’s desire to achieve economic growth and what it ultimately leads to.

First of all, economic growth occurs because it provides ample of opportunities to many people. Businesses open up or expand; people earn more income and thus live happier. The opposite is true as well. There are poor people whose financial situation never changes regardless of economic growth. But why does economic growth lead to property booms? Well, to answer this question one must look at how market economic works.

Market economy is type of economy that promotes freedom within itself. Restricted regulations and unregulated markets are distinctive feature of modern market economy. In the economy there is always scarcity. But our wants are unlimited. For this reason, over time of course, prices of goods and services tend to increase, so do incomes. However, property is not affordable to some people and any increase in property prices make these people worse off.

Economics growth leads increase in aggregate demand and this puts pressure on prices. However, property prices increase enormously compared to other goods and services. Property is used to make money as well that why it is so expensive. However, what’s n less supply has higher price as well.

Consider Elvis Presley shoes from 60s. There isn’t a lot of supply of that but demand is high so the highest bidder always buys such good or services. The same exact principle applies to economic growth and property booms.

Limited supply of property but huge demand makes them very and very expensive. Economic growth leads to property booms because it tends to increase demand for goods and services, and since the resources within the economy are scarce, prices increase and so do property prices, which leads to property booms usually accompanied by busts.