Real Estate: Differentiation and Integration

Real Estate remains one of the most sought after investment mediums in the country because of its characteristic nature of Capital Appreciation. However, the real estate marketplace can be quite complicated especially with the rapid increase in property values within a short space of time. The real estate market can occasionally be difficult to predict with the dynamism in market trends and structural changes affecting the industry.
Nonetheless, there are a number of factors that define the real estate market place which inadvertently lead to increase in property values and affect investment opportunities over time. Understanding these major market determinants will go a long way in ensuring that you get maximum value from your real estate investments.

Population Composition: Understanding the demography of your current real estate market is key. Demography is not just limited to the population size but also has to do with age, race, gender, income range and other key measures. In making any investment decision, you have to look at your target audience or the calibre of people within that market. Are they Millennials? Are they medium or high income earners?

Interest Rate: The changes in interest rate affect a buyer’s ability to buy a piece of residential property. If you want to invest in a buying a home especially for a mortgage, you have to consider the interest rate. if the interests are lowered, it will lower the cost of getting a mortgage to buy the home. It will ultimately create a high demand for real estate, and push the prices higher.

Government Regulations: Tax credit, subsidies and deductions are just a few government policies that affect the demand and supply in the real estate marketplace.