Since 2020, when the world turns into chaos – wildfire, explosion and of course, COVID-19, everyone has been locked inside their house, waiting for these series of disasters to walk by, hoping for a better year ahead. Even today in the year of 2021, we are still at the same exact state, staying at home. However, as this condition continues, many companies – no matter small and medium enterprises (SMEs) or even multinational companies (MNCs) – are cutting their losses in all ways imaginable. Among those methods are cutting the salaries or letting go of their employees. While it is all about survival, this leaves the employees with no way to go.
Having a low or even no active income, many turn to the idea of building their own passive income. One of the increasingly popular ways is real estate. However, there are some facts that you have to be well-versed in to be able to successfully earn big in this industry. One of the concepts that you must grasp is how politics and economies affect property and real estate prices. To help you learn, we compiled a list of facts to help you understand quickly for your jumpstart into this industry!
Of course. Buying real estate, you have to understand its land and area – and talking about land and area, you have to understand what kind of rules and regulations you are playing by. Who sets the rules? The government does. Each country around the globe has a different set of property laws and regulations. Each decision that the government made would inevitably affect the real estate market – either positively or negatively. Take the late 1980s for example. The UK conservative government decided to reduce their investment in social housing and promoted the ‘right to buy’ among its citizens in order to cut their losses. However, this led to an enormous decline in real estate for vulnerable tenants which consequences still continue today! A huge amount of new rules and legislation were introduced which affects all aspects of the real estate markets that includes restriction of mortgages and debts, first-time buyer incentives, reducing buy-to-let demand and many more.
Of course, the general state of your countries’ economy comes into play when it comes to real estate price inflation. For example, Brexit has definitely decreased buyers’ demand for properties in the UK. As the definition of proximity suggests, the events that are happening at a local level would make the greatest difference and changes in your property market, so stay alert and updated of current events! Other than the general economic state of your country, it is also important to keep track of your country’s wage growth. When wages fail to sustain its citizen’s living costs and unemployment rises, it will definitely affect the general demand of real estate – especially when property is a big investment.
With your potential prospects feeling uncertain of their living sustainability and being risk-conserved, it is certain to have a lack of buyers which leads to lack of transactions that ultimately would force you to drive down your prices. Situations such as an increase of job unemployment would quickly dent your prospect’s confidence and slow the market prices down from rising to failing. However, this may not mean a complete loss. While a struggling economy is unfortunate for those who are aiming for capital growth or sell up, this also means bargains are most available for investors and first time buyers, so if you are one, this might be the best time during this pandemic. Always remember, whether you own or rent, putting a roof over your head has its costs too. Even if you are a homeowner and you’re not making a huge profit on your property, with a good mortgage and a sustainable roof from your local flat roofer, you will still have a cozy home.
Other than your local politics and economy, there are many things that affect the property market but if you keep up with current and old political policies, economy changes and of course, the current events and happenings in the real estate market area, you can turn your losses into profit in no time!