What can impact property values during an inflationary environment?

In an inflationary environment, rising construction costs significantly impact property values. As inflation occurs, the costs of materials, labor, and other associated expenses for building properties tend to increase. This leads to higher prices for both new construction and major renovations. When construction costs rise, developers may pass these costs onto buyers or renters, resulting in higher property values.

Additionally, increased construction costs can reduce the supply of new housing or commercial properties entering the market. With limited new inventory and consistently high demand, the existing properties may see even greater appreciation in value. This dynamic reinforces the relationship between rising costs and property values in an inflationary context, impacting both the immediate market landscape and long-term investment considerations in real estate.