Real estate issues

Top 10 issues affecting real estate

The real estate industry is continuously in a state of flux. The smallest signs of a political change, the smallest smoke signals of war or even a natural calamity can have an effect on real estate prices and send values crashing overnight. There are many issues covering real estate stability but here are the top 10 ones that are traditionally know to have an impact on the real estate sector, for the better or worse.

  • Global uncertainty – This can take on many dimensions. On top of the list is political stability or instability. The slightest hints of war can send real estate prices crashing in that region with the ripple effect affecting other countries in the world.

  • Recession – Economic downturn is the single largest enemy of real estate. Not only do mortgagees start defaulting on their payments, a lack of demand translates into millions of units of constructed and fully finished structures remaining unsold and blocking investments of key real estate players.

  • Advancement of technologies – While the real estate business is yet to reach the robotics era, automation and computerisation of major activities has left many workers in the industry without jobs. This has a cascading effect resulting in poor demand for housing and retail industry due to lower purchasing power.

  • Rising costs of living – Real estate purchases have traditionally been fuelled by the young and middle aged generation who have built up some savings and yet have substantial working life in hand to complete mortgage payments. However, with rising inflation and cost of living there is low disposable income left in the hands of the young to invest in real estate affecting demand in this sector. Many often contact a recruitment agency in Melbourne or whichever country they live in for better job opportunities to increase income levels to invest in real estate. Incidentally, for those not in the know, one of the leading recruitment agencies in Australia is First Personnel.

  • Demand for healthcare – The rising demand for healthcare has been a big boon for the real estate industry. Hospitals and medical facilities are being built in almost all countries in the world, helping the sector to get over the recent slump.

  • Global warming – Rising sea levels as a result of global warming has rung panic bells in the real estate sector. Areas that have become prone to flooding or where scientists have projected rising sea levels have all seen a fall in real estate prices.

  • Infrastructure investment – This is one area that has seen a steady growth largely because investments have come from the public sector. Governments will continue to build bridges and highways and ports and there will never be a dearth in demand for real estate for infrastructure development.

  • Immigration – This is a double edged sword. Countries that have restricted immigration have also slowed down the growth in real estate sector due to a fall in demand for housing. The opposite is true for countries with an unrestricted immigration policy.

  • Change in shopping styles – More and more people are switching to smart phones and other Internet enabled devices for their purchases. The exponential boom in online shopping has seen a diminishing demand for building conventional supermarkets and shopping malls.

  • Monetary policies – Governments change monetary and fiscal policies in tune with their requirements. Tax imposition (or relaxation) on real estate transactions can affect prices thereby impacting demand too.

These are primarily the 10 key issues that affect real estate sector.