7 Factors That Exercise a Great Impact on the Prices of Real Estate Properties
Real estate prices never cease to amaze. If we observe the real estate market for a reasonable period of time, we realize that it is characterized by having two cycles, one of “rise” and the other of “fall”. The former are the periods when prices spike in the market which is almost inevitable and which are followed by other periods when prices plummet. Actually, there are people who make a living from these cycles. They are people whose study of property markets has led them to a point where they can count on sufficient reliability when they are seeing a “drop” (when prices are ultra-low), which is at this point when they buy the property, and then during the “rise”, he sells it, practically making his fortune. Prices in most areas are influenced by the strength of supply and demand. But for some reason, the prices of the market real estate seem to be dictated by what comes across as a set of very different forces.
In reality, faltering property prices are still under the control of the forces of supply and demand. The fall in prices occurs when there is an “excess supply” of real estate, compared to the effective demand in those periods of time, while the increases occur when the demand exceeds the supply. However, as it turns out, the dynamics of supply and demand in the real estate market, in turn, tend to be under the influence of other deeper factors; so if we look at the dynamics of supply and demand of even an affordable property in a prime location, they are in manifestations reality of other factors.
Here are 7 factors that eventually affect real estate in terms of many ways, such as productivity, availability, price, and quality.
Demographics
Real estate can be influenced by demographics, which is the composition of a population.
It comprises income, migration patterns, and population growth. These statistics are the first and most important ones to analyze in order to obtain the consistency of the growth of a real estate company. This factor has often been seen to be overlooked by most companies. However, it can bring about a remarkable change towards better productivity and huge income.
Economic factors
One of the most essential factors is the overall economy of a country, which has a major impact on the real estate market. The economy of a country measures the ability of a particular client to invest in a property. In general, the economy can be determined by factors such as GDP, income growth, and unemployment.
Political Factors
Considering the political factors that can affect property prices; we would have to look at the government that is in power, as different governments have different policies on real estate. Something like the approach of elections, and the uncertainty that such periods tend to come with, can cause prices to drop. Faced with this uncertainty, people want to see the results before saying whether to buy an affordable property in a Prime location or not.
Social Factors
Socially, we are looking at something like population growth, which when combined with some money in people’s pockets, often translates into higher demand for real estate, ultimately leading to a rise. We are also looking for something like an increase in the crime rate in a certain area, which can cause people to be careful living there, resulting in a drop in demand and therefore failure.
Government Policies
The other factor is frequent amendments in the context of the property policy published by the government. Real estate companies rely more on government policies to raise and lower their current price. Amendments like tax credits, subsidies, and deductions are some of the factors responsible for influencing the real estate market.
Interest rates
The interest rates provided by a real estate developer or company can bring about a big change in your demand. If a real estate company constantly changes, its interest rates on a property, this can influence a client’s ability to purchase a property. The constant conversion in interest rates only makes the situation rigid and ultimately hinders growth in the real estate market.
Amenities
This factor may have a minor influence on the real estate business but sometimes it creates a huge effect on the demand and availability of the market price. When the property is in a good condition with better infrastructure and modern amenities, the property’s value increases. However, the same is not offered by a real estate developer or company, it influences the entire real market with less demand and requirements.
To go up, there are many factors that can influence the real estate sector and its market demand that ultimately decides the market price. The above factors are the main factors that can influence the real estate market.
