What Drives The Demand Of Real Estate Up?

by Susan Smith

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The effects of the severe economic crunch that shook economies the world over are vivid on various sectors globally. If on one hand, governments are trying to overcome the devastating effects of global crises then on the other hand, individual stake holders of every sector are also trying hard to set the activities of respective sector towards the path of recovery. The global real estate is one such sector that suffered a lot due to global recession! Be it the US, Canada, Dubai or even less developed countries like Pakistan, Turkey, Singapore and India, almost all the countries have witnessed the decline in demand of real estate.

Every government and other major experts are fighting against the situation as real estate is the major sector that adds tremendously to the national income. To assist the experts in the betterment of global real estate sector, I am providing top 5 tips that can derive the demand of real estate up in a short period of time.

 Increase in Employment Opportunities

Government of every country should increase employment opportunities as this will not only increase national income but also will give a boost to the demand of properties. People from the nearby countries, in order to exploit these opportunities, will come to settle in that country. Obviously if they come, they will need a proper place to live too. This influx of the people in the country will automatically increase the demand of properties.

Increase in Purchasing power

Inflation, inflation everywhere! This is true that no country is free from this economic disease. Inflation is responsible for weakening the purchasing power of people and worsening their standards of living. Many countries go through vicious circles of poverty only due to inflation. If a person cannot afford a proper meal and medicine how can he spend on buying a home for himself? Inflation is playing multiple negative effects. It’s affecting the purchasing power of people and increasing the prices of properties. In such a fierce situation, the only way to increase the demand of properties is to lower inflation and increase purchasing power of people.

Decrease in interest rates

The fact is that interest rate on mortgage loans are very high in almost all countries. People who want to take a loan to buy homes cannot even dream to do so because of the high interest. As a result, these people are forced to live on rents. If government takes proper steps to decrease the interest rates on mortgage loans, a huge investment can be attracted towards real estate sector.

Relaxed lending criteria

In many countries, due to the fear of bankruptcy, banks are reluctant to relax their lending criteria for mortgage loans. The procedure is complex and involves a series of steps for loan approval. The strict background check on part of the banks is also responsible for keeping the people away from this facility. Also, the unnecessary and unimportant documentation wastes time and nobody wants to suffer that. If banks relax their lending criteria, the demand of properties can surely rise.

Increase in Foreign investment

In recession, people have usually no confidence to invest their amounts somewhere as the market situation is unpredictable. Government should attract foreign investors to increase the confidence of people which can encourage more investment for real estate. When people will see that foreigners are investing in the local market, they will also start investing in real estate which will automatically increase its demand.

My years of experience and knowledge in real estate show that these 5 factors can have a magical effect on the overall demand of real estate.

{ 5 comments… read them below or add one }

Kaytlen @ Properties in Idaho August 16, 2011 at 10:15 pm

These five things could definitely see an increase in the economy! In Boise we have seen people who are down on their luck with lost jobs, but we also see people who are working hard and the real estate industry is no different. Some agents are having a difficult time finding work and clientele but we’ve had an influx of work. No matter what, implementing these ideas could definitely boost the market here.

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Homes For Sale in Mesa AZ August 19, 2011 at 4:31 am

Thanks for the info. It is very insightful. buying or selling a home is a big leap to any buyer or seller, most of the time; it is one of the most important decision or transaction in their entire lifetime, so it is really important to choose wisely, worth of all the efforts, and ofcourse, money. I quite agree that the increase in sales reflected in the increase in investment, both foreign and domestic that bring about confidence to investors.

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orange real estate August 20, 2011 at 2:20 am

I definitely agree that the rise in Increase in employment opportunities, and the customer’s purchasing power greatly boost the deamand in real estate. It is true then that the real estate market is booming. Thanks for the post.

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esl teaching jobs in korea August 23, 2011 at 5:35 am

the main factor is the increase of employment rates that drives the demand of the real estate up..

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newton realtor August 23, 2011 at 7:46 am

Yes, if employment were to rise, real estate would rise. It’s all a trickle affect that will probably take just as long as it’s been going down to go back up.

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