3 MAJOR FACTORS DIRECTLY AFFECTING THE REAL ESTATE MARKET
Recently, the global real estate market has been going through a volatile period with great changes. This fluctuation is said to be the result of a combination of many factors, of which prominent macro factors are.
In this article, let’s learn about 3 macro factors that directly affect the volatility of the real estate market.
Not only the housing market, a bad economy can affect many different industries on a large scale. Historically, the global economic crisis has dragged down the real estate market, which can be seen in 2008.
During the 2008 economic crisis, millions of people lost their jobs. As a result, having to manage monthly bills and living expenses becomes far more of a concern than buying a new home or looking for a potential investment opportunity. Even those who still have steady jobs during these tough times tend to feel negative amid such a bad economy. This also has a significant influence on the decision to put money down of investors.
Supply and demand relationship
Real estate is considered a special commodity, with high value and great influence on the entire economy, so the real estate market is strictly controlled by the state. However, in some respects, real estate is still a “commodity” in the market, so it is also governed by the law of supply and demand.
Simply put, when the price is high, the number of people who want to sell will be more than the number of people who want to buy (supply is greater than demand) and vice versa. As for the real estate market, the demand is always large and is expected to continue to increase, but we need to consider each segment. At present, the imbalance in structure is one of the outstanding features of our country’s real estate market.
It can be said that the loan interest rate is a factor that will directly and comprehensively affect the real estate market. Specifically, when interest rates are low, people will find it easier to choose a mortgage to buy a house. In case interest rates increase, the real estate market tends to slow down because at this time, people will consider more when interest rates are beyond their ability to pay.
With some exceptions, there are still people “upstream” looking for opportunities with real estate when interest rates rise because of less competition.