4 key factors that drive the real estate market

Jul , 20
4 key factors that drive the real estate market

It is a fact that real estate represents a significant portion of most people’s wealth. Nevertheless, there are a few factors affecting the real estate market in India such as demographics, interest rates, the economy, government policies/subsidies, etc.

Let us discuss these factors in detail:

  • Demographics

Demographics are the data that describes the composition of the population such as age, gender, income, population growth, etc. Major shifts in demographics can have a large impact on real estate trends for many decades. There are innumerable ways a demographic shift can affect a real estate market. 

  • Interest rates

A prospective buyer’s ability to purchase a residential or commercial property can be influenced by the change in interest rates. The cost to secure a mortgage to buy a property is lowered when there is a reduction in interest rates (though such circumstances can shoot up the price). There is a substantially different impact of interest rates on real estate investment trusts.

  • The economy

The economic situation of a nation plays a very important role in the value of the real estate. There is a positive correlation between the economy and real estate which means that when the economy improves, the real estate prices shoot up and vice versa. It is measured by economic indicators such as the GDP, manufacturing activity, employment data, etc. Commercial real estate which is less correlated to the cyclicity of the market will not be much impacted by the downfall of the economy. 

  • Government policies

The government can temporarily push up the demand for real estate with deductions, subsidies, and tax credits which are some of the many ways the government uses to increase demand as the legislation holds the authority to determine the demand and prices of properties. It is very important for businesses to be aware of the current government incentives and levies. 

These are some of the major factors that drive the real estate market in the country and it is important for businesses and real estate entities to be aware of these things. 

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