There are two ways to increase the price of any item; either the demand increases or supply reduces. A hike in the demand for an item always results in the appreciation of its market value as long as the supply remains fixed. A reduction in supply, on the other hand, means not enough to go around, resulting in a higher valuation for the available. Hence, the reason why the red diamond remains the most expensive gem in the world due to its rarity.

Buoyed by positive sentiments and easy access to credit facilities, the increase in demand for an item may result in a boom. Characterised by increased commercial activity, these medium to long-term periods of rapid market growth is the pursuit of every business and sustaining it, their goal. Output increases, investment, and job opportunities open up, and prices climb up sharply, driven by market enthusiasm.

Strong investors’ confidence and demand is the driver behind the market boom. Investors’ confidence in a “bright” future always translate into more purchases in anticipation of selling at a higher price in the future, resulting in speculations. The increased purchasing demands means companies have to boost supply by acquiring the necessary manpower for raising production level. With easy access to capital and liquidity, investors, businesses, and now speculators can borrow at very low rates, stimulating more demand. But what happens when the market overheats from the friction caused by demand outstripping supply or too much money chasing a limited supply? A bust is on the horizon...

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https://medium.com/@ElementsEstates/how-the-real-estate-industry-got-its-fundamentals-wrong-ef4fcd4a5fbe