What effect does high demand for housing typically have on property prices?

High demand for housing typically leads to an increase in property values. When more buyers are actively seeking homes in a particular area, they compete for the available properties, which can drive prices upward. This phenomenon is often influenced by factors such as population growth, economic development, and interest rates, making the housing market more competitive. As demand rises and the supply of homes remains limited, sellers can often set higher prices, leading to an overall increase in property values.

In contrast, decreased demand would not contribute to price increases, while stabilization in prices generally occurs in a balanced market with equal supply and demand. The notion that demand has no effect on prices does not accurately reflect market dynamics, as consumer interest is a key driver of real estate value.