There are several conditions regarding real estate. The size and the scale of the real estate market make it an attractive sector for many investors: several factors impact real estate prices, availability, and investment. There is a specific condition that affects the market variations.
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Demographics describe the data regarding the population, age, race, gender, and income all come under demographics data; this is usually overlooked, but it plays a vital role in real estate. A significant shift in the demographics can have an enormous impact on the trends of real estate for several decades; for example, if there are more people who are retired, it can affect the demand for big homes as the income might be less, so the need for big houses might decrease.
Interest rates can also have a significant effect on the real estate market; changes in interest rates can affect an individual’s decision to buy a house; lower interest rates mean the demand for real estate will increase, which will result lead to high prices. Also, when the interest rates rise, the cost to obtain a mortgage increases, thus lowering the demand and prices of real estate.
Another critical point that affects real estate is the economy’s health. The GDP measures this, employment data, the prices of goods, so when the economy suffers, does real estate.
GOVERNMENT POLICIES AND SUBSIDIES
The government can affect real estate primarily with subsidies, tax redemptions. All of these are some of the ways in which the government can boost the demand for real estate. For example, some the government really gives importance to real estate, so they have come up with some incentives that can help increase the demand for real estate. Lowering the taxes, one has to pay while buying a property can immediately increase the demand.
SIZE AND THE SCALE
The size & scale of the real estate market are also significant factors affecting real estate; if it is large, investors find it more attractive. Investors can invest directly in physical real estate or indirectly through managed funds.
In a monopolistic structure, a single supplier holds the majority of the market power; this affects competition in the real estate market.
The flow of funds among countries affects the country’s economy, and as a result, it affects the real estate market; if a country exports more, that means the people can invest in other stuff, such as real estate. Also, the currency’s price affects this; if the demand for the money is high, the result leads to the betterment of the market. Similarly, if the country’s currency is weak, it will lead to fewer investments coming in.
The steps taken by investors shift the market; when people agree on one direction, the market enters into a trend that could sustain itself for many years.
SUPPLY AND DEMAND
The demand affects real estate in numerous ways; if the people have large incomes in return, they will invest more, leading to the need for real estate increases. If supply increases more than the demand, that will lead to the prices decreasing. The price usually rises because the market is high, reducing because the demand is low.
The politicians & the people in power have certain expectations about what the futures market would be like; this helps in setting the prices and the future trend of real estate.
In conclusion, there are several conditions regarding the real estate market; these conditions benefit or disbenefit the market. Not following these conditions might also lead to a harmful effect on the market.
Muhammad Junaid is senior Analyst, and Search Engine Expert. Extensive experience being an IT Manager in Park View City. Work for years with local and international enterprises. Also, represent well-known brands in the UAE.