something about the price of houses

We all know now we are in a recession a whole world recession.And the basically reason is the credit crunch.And it affective a lot of things.The housing market was the first area to be affected by the credit crunch as banks curtailed their lending, making it more difficult for buyers to get a mortgage.

So the price of houses will influence a lot of our economy.There is a graph can show us what the situation is now .WE can see it is falling now.So is that a good thing or bad thing?Because of the houses price is cheaper and cheaper people who do not have a house now may can buy one it is much cheaper now .It's that a true ? Actually not.Because houses are the things called wealth of course if people have more wealth they will feel more confidence.So if the price of the houses are high people will think they have a lot of wealth. So they will spend more .Therefore the consumption will increase,So the Aggregate Demand will also increase,therefore the GDP maybe also increase.But now our situation is completely opposite way.The price of houses lower and people become less confidence and people less likely to spend.Also the government want to encourage people to spend more they make the interest rate lower and lower.Now it is only 1%.So because of the recession there are more and more unemployment.And the price goes down and down , but people still not buy a lot.Cause they think the best thing they can do is keep the money in self's hand.So the problems will be bigger and bigger... worse and worse...

Anyway now we can not give any help to the government to solve those problems.Only thing we can do it is work hard in studying Economic,and may be we will help in the future. : )