6 Aspects that affect the Real Estate Market

6 Aspects that affect the Real Estate Market

Everyday there appears to be more news and theories on the state of the housing market and its future. The people who report and share these claims receive their information from numerous sources and cite causality to a variety of things.

Yet how do we know who speaks the truth? Who sources their information from reliable sources and interprets it in a trustworthy way? Unfortunately these days, it can seem like some people will say what ever will benefit them and/or their business, to the best of their knowledge.


What we can rely on is our own judgement, granted our knowledge is at least informed or educated in the subject. That is why the following article has been provided; a starting point, so that you have a basic knowledge the next time someone talks about the real estate market with you.

Economic Growth – People buy and rent houses in accordance to their income therefore demand for housing is dependant on income. In a period of economic prosperity, incomes will increase as well as job security giving people the disposable income to afford a mortgage or confidence that they will be secure enough for the next 15-25 years while they pay off their mortgage.

Unemployment – This appears to be an obvious one as no job and no income, equals: not able to afford a home. There is also the factor of ‘fear of unemployment’ in the near future that might hurt a potential buyers confidence towards making such a long-term investment.

6 Aspects that affect the Real Estate Market

Interest Rates – The Interest rates that homeowners pay back their home loans at on a month-to-month basis has a large effect on the Real Estate Market. High rates will discourage people from entering the market under the guise of affordability.

Consumer Confidence – ‘Confidence‘ has been mentioned already under ‘Unemployment’, but there are many more numerous factors that may affect this. If house prices fall, environmental or economic factors for the area are unappealing etc. then consumers’ confidence will be low in that region for the local real estate market.

Mortgage Availability – Depending on demographic and region, different lenders and banks will lend under different conditions. The easier it is to get a Home Loan in a region, the better the local Real Estate Market will perform.

Supply – This also takes a leaf from the ‘Mortgage Availability’ point. Example: If there are population booms and new home construction is not able to keep up with demand, then housing prices will increase and vice versa.

Hopefully these points have given you an outline of the factors that exert influence on the state of the real estate market, so that next time it becomes the topic of conversation you are able to follow and maybe even interject.

 

If you have enquiries, Madeleine Hicks Real Estate team is available to call today on: 07 3355 6845.

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