It seems like every real estate downturn gets blamed on the economy. There is a reason for this. The state of the economy plays a huge part in the amount of money that is available for people to buy homes. Factors such as politics and natural gas and oil production contribute to the state of the economy and, in turn, the real estate market. For example, if politicians are feuding over financial conditions, the real estate market could be affected as result of the dispute.

Politics, banks and the global economy can all influence the real estate market when it comes to interest rates. The real estate crash of 2007 proved the global impact of the real estate market and increased awareness of how interest rates and loans are used in home buying. If things aren’t looking good abroad, it might affect your ability to sell homes domestically. Keep an eye on what’s happening in the global market and with foreign investment as these play large roles into the expectations of the local market as well.

Knowledge of demographic factors such as age, race, gender and median income of a particular area will help you anticipate market trends and better position your homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips you to show the neighborhood to the appropriate buyer. And though you’d think an area with a bunch of new college grads would be a prime market in which to sell homes, recent grads are often too tied up in student loans to be serious candidates for a new house.

3.how to control
real estate market can be control by government policies. government can control the price by act and taxes.

1. What is the elements 

- Economy
- Demographic 
- Government policies 

2. How it affect the market

- Economy - The strength of the overall economy significantly impacts the real estate market as consumers’ ability to support housing prices largely depends on key factors like GDP, unemployment, and income growth. That means are when there are many unemployment, that will make real estate market become less active because people or consumers did not have money to buy a real estate.
- Demographic - Demographic are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades. That means when the location of that property had a many population, it will effect the price which is that people will want to find a real estate.
- Government policies - A great example of how government policy can change the supply/demand balance in our housing markets is the Perumahan Rakyat 1 Malaysia (PR1MA). With the introduction of the grant at the beginning of this decade we saw the start of one of the largest property booms in our history. The PR1MA make many new homebuyers entered the market all at once, intensifying demand levels substantially. This is because of the affordable price to buy a real estate. This will make real estate market become active.

3. How you can control the effects 

-interes rate

-Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the higher interest rates go, the higher the cost to obtain a mortgage to buy a home will be, which creates a lower demand for real estate.

-if the Fed wants to lower the fed funds rate, it takes securities out of the bank's reserves and replaces them with credit (that's just like cash to a bank). Now the bank has more than enough reserves to meet its requirement. It lowers its fed funds rate to lend the extra reserves to other banks. It will drop the rate as low as necessary to get rid of excess reserves.

The housing crisis created an appealing environment for investors with an appetite for residential real estate. The increased volume of foreclosures and short sales provided both domestic and foreign investors with the opportunity to snatch up inexpensive properties to either rent out or renovate and resell at a profit.

How to control the effect?
Government should control the price

references:
http://www.realestateinsidermag.com/business-tips/factors-affect-real-estate-market/
http://resources.point.com/8-biggest-factors-affect-real-estate-prices/ 

1.what is the element?
 - demographics   
- interest rates
- location

2. how it effect the market

Factors affecting the property market are in two categories, namely internal and external factors. But all of these factors will somehow affect the real estate market. Demographic factors refer to age, income gap, population in an area and so on. For high-income groups in the area, the real estate market will be expensive. This is the same for a large number of people that will cause home prices to soar. This is because of the high demand caused by high population growth and income.

So interest rates are determined by the bank over the borrower who makes a loan for the purchase of a home. The high interest rates imposed will cause borrowers to pay a large sum of money later on. As a result, not many will make the loan and real estate market suffer from a lack of demand.

Location plays an important role in the real estate market. This is because, the property is in the best location and the strategy makes the price expensive and vice versa. Selection of real estate in a good location becomes a buyer's fight because there are many benefit.

3.How you can control the effect
These effects should be regulated for the good of buyers and sellers in the real estate market. This is because, the control must be done to achieve a balance in the market. Among the areas that can be done is by reducing interest rates by banks to housing borrowers for them to get their dream home. this will cause many to make loans and real estate demand will increase as well as balance the market. Furthermore, the seller or developer shall have the maximum and minimum floor price for the price of each property. this is because they will not sell real estate at extremely high prices and in line with the level of buyer income.

- property location

- neighborhood 

- economic

- interest rate

2. How it affect the market

Real estate have many factor that contribute to higher and lower demand for property in particular places. As an example, the property location. Property that located in a city have a higher demand than property that located in rural places. This also depend on the population in the area if the population is high the demand would be higher and make the real estate market going faster.

3. How you can control the effect?

Interest is essentially a rental, or leasing charge to the borrower, for the use of an asset. In the case of a large asset, like a vehicle or building, the interest rate is sometimes known as the lease rate. When the borrower is a low-risk party, he will usually be charged a low interest rate; if the borrower is considered high risk, the interest rate that they are charged will be higher.

1.Demographics
Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth.

2.Interest Rates 
Interest rates also have a major impact on the real estate markets. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

3.The Economy
Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc.

4.Government Policies/Subsidies
Legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends.

1. What is the element
- property location
- neighborhood 
- economic
- interest rate
2. How it affect the market
Real estate have many factor that contribute to higher and lower demand for property in particular places. As an example, the property location. Property that located in a city have a higher demand than property that located in rural places. This is because in city there are many accomodations that were provided for the people. 
- interest rate. Lower interest rate lead to lower mortgage rate offers fron banks, decrease the monthly payment. People tend to make a loan and buying a property. Demand for property will rise. 
3. How you can control the effect
Real estate market can be control by law and policies that have been made by the government. Real estate need to be control, if not the house price will increase and affect the affordability of home buyers

These factors are not independent of one another – e.g., many parents want to drop the kids off and pick them up at school as part of a reasonablecommute to and from work. These three preferences – proximity to school, work and entertainment/shopping — are a trinity that make for immensely valuable property. Generally, getting a home which has one of the three attributes won’t blow the proverbial roof off the price per square feet. If you’re getting two out of three, one should expect stiff competition and commensurate prices. To get all three, one might need a small war chest to finance your home-buying exploits.

•NEIGHBOURHOOD

Appraisers and real estate agents look at recent sales of homes with similar features to use as a benchmark against your home’s potential price. Foreclosures and short sales often complicate things because they tend to sell at lower prices, decreasing the neighborhood’s overall average sales price. Comps (along with offer details) are usually the key driver for the appraisal process: most appraisers will rely heavily on recent nearby transactions on homes of a similar size to yours.

•ECONOMY

The strength of the overall economy significantly impacts the real estate market as consumers’ ability to support housing prices largely depends on key factors like GDP, unemployment, and income growth. The Great Recession from 2008 to 2012 underscored the link between real estate and the broader economy. Local economies with a large number of real estate-related jobs (whether in construction or mortgage financing) experienced significant property price depreciation. Other local macro-trends can outsize national factors in their importance; for example, California’sincome growth ratecame in at 1.2% in the first quarter of 2015 compared to the national average of 0.9%. This gives buyers the ability to spend more on housing, consequently increasing real estate prices.

Reference : http://www.ccsenet.org/journal/index.php/ass/article/viewFile/38499/27984 

1. What is the element? 

1.      population , demand, supply 

2.      location 

3.      neighbourhood 

4.      physical characteristics 

5.      Accessibility 

6.      developer 

2. How it affect the market? 

Real estate have many factor that contribute to higher and lower demand for property in particular places. As an example, the property location. Property that located in a city have a higher demand than property that located in rural places. This is because in city there are many accomodations that were provided for the people. 
 - interest rate. Lower interest rate lead to lower mortgage rate offers from banks, decrease the monthly payment. People tend to make a loan and buying a property. Demand for property will rise. 
 
 3. How you can control the effect? 

Real estate market can be control by law and policies that have been made by the government. Real estate need to be control, if not the house price will increase and affect the affordability of home buyers 

http://resources.point.com/8-biggest-factors-affect-real-estate-prices/

1. What is the element?

A) property location

B) updates and upgrades

C) inspection report

D) neighborhood Comps

E) appraisal value
F) economic indicator
G) interest rates
H) investors

2. How it affect the market?

A) Property Location

Economists encapsulate “location” in something called “hedonic pricing” for most homes, this translates to some key factors that impact your life and your lifestyle which is quality of local schools is frequently the single most important factor for buyers with children of school-going age, proximity to local employment opportunities is a very high priority for most employment-age buyers and proximity to social, shopping and recreational centers is valued most by younger buyers but plays an important role in pricing for all homebuyers

These factors are not independent of one another. For example, many parents want to drop the kids off and pick them up at school as part of a reasonable commute to and from work. These three preferences are proximity to school, work and entertainment or shopping that are a trinity that make for immensely valuable property. Generally, getting a home which has one of the three attributes won’t blow the proverbial roof off the price per square feet. If you’re getting two out of three, one should expect stiff competition and commensurate prices. To get all three, one might need a small war chest to finance your home-buying exploits.

B) Updates and Upgrades

While some buyers actively seek out fixer-upper properties, most home buyers prefer a house that is move-in ready and they are willing to pay a reasonable premium for that comfort. A new roof, for example, generally recoups more than 80% of its value when the home is sold. According to the National Association of Realtors, upgraded kitchens and bathrooms are among the most important upgrades cited by homebuyers because they represent a major expense if the buyer has to upgrade them. To understand regional variations in how upgrade investments recoup their value, Remodeling Magazine provides regional reports rich with data. For example, steel entry doors and manufactured stone veneers tend to give Pacific coast homeowners the most bang for their buck upon selling their properties.

C) Inspection Report

In some hot markets, buyers may forego their right to an inspection report but that’s a risk that most mortgage lenders won’t underwrite. For most buyers, mortgage financing is contingent on a favorable inspection. Even if a home is under contract, the inspection report can greatly impact the price of the home that are usually downwards as the buyer uncovers previously unknown or undisclosed issues that require repairs. The more recommended repairs on the report, the more negotiating room a buyer has. If the deal falls through, the seller must disclose the inspection report to future buyers, further dampening the chance to sell at the original listed price.

D) Neighborhood Comps

Comparable properties, sometimes called “comps”, sold in your area also impact your own home’s market value. Appraisers and real estate agents look at recent sales of homes with similar features to use as a benchmark against your home’s potential price. Foreclosures and short sales often complicate things because they tend to sell at lower prices, decreasing the neighborhood’s overall average sales price. Comps that along with offer details are usually the key driver for the appraisal process: most appraisers will rely heavily on recent nearby transactions on homes of a similar size to yours.

E) Appraisal Value

The appraisal is the real estate industry’s formal process for pricing a property. All states require appraisers which is for any federally regulated lender, be licensed or certified by an organization accredited by the Appraiser Qualifications Board (AQB). Whenever a loan is involved in the financing of a property purchase or home equity borrowing, an appraisal is almost always required. Most lenders won’t approve a loan for more than the appraised amount, so if the assessed value falls short the seller either needs to lower the price or the buyer needs to put extra money down to decrease the loan amount. Additionally, if the appraiser deems there is a structural issue such as a faulty roof or termite damage, the bank will not approve the loan until the issues are fixed that most often at the expense of the seller. Appraisers follow a structured process for evaluating the property by looking at recent comparable sales to establish a benchmark price and then adjusting the price up or down according to the upgrades and improvements you have or have not made relative to the comparable properties.

F) Economic Indicators

The strength of the overall economy significantly impacts the real estate market as consumers’ ability to support housing prices largely depends on key factors like GDP, unemployment, and income growth. The Great Recession from 2008 to 2012 underscored the link between real estate and the broader economy. Local economies with a large number of real estate-related jobs whether in construction or mortgage financing, experienced significant property price depreciation.

G) Interest Rates

When people talk about the “Fed interest rate”, they usually mean the Federal Reserve overnight borrowing rate for depository institutions. This is a key factor in how mortgage rates are established because it sets the cost for banks to borrow money. Lower Fed interest rates typically lead to lower mortgage rate offers from banks; this, in turn, decreases the monthly mortgage payments a homebuyer must pay for a given mortgage amount. The smaller the monthly payment, the more “affordable” a loan is to prospective homebuyers; this fact can increase the size of the mortgage for which homebuyers are eligible to get which, in turn, might drive up property prices. While current Fed interest rates are at near historic lows, the Federal Reserve has hinted at a hike in the federal funds rate by the end of the year, which should eventually manifest itself as an increase in mortgage interest rates.

H) Investors

The housing crisis created an appealing environment for investors with an appetite for residential real estate. The increased volume of foreclosures and short sales provided both domestic and foreign investors with the opportunity to snatch up inexpensive properties to either rent out or renovate and resell at a profit. Recent research from the National Association of Realtors shows that the percentage of homes purchased by investment buyers stands at about 20% of the market  As the number of distressed properties begins to dwindle, the market could potentially slow as these parties wind down their purchasing. Many of these investors will want to liquidate some of their property holdings at some point, which, if mistimed, could result in too many homes hitting the market at once.

3. How you can control the effect?

Real estate market can be control by law and policies that have been made by the goverment. Real estate need ti be control, if not the house price will increase and  affect the affordability of home buyers. In the same way, goverment should put a floor price (maximum or minimum) for ech property in Malaysia. So that the buyer cannot mark-up price to get a higher profit. Moreover, this also can make the value for property a more affordable for buyer to buy it. Besides, goverment can reduce interest rate of banks to make a loan for housing borrowers.

1)element

Government policies

2)how it affect the market

Tax credits, deduction and subsidiaries are some of the ways thegovernment can temporarily boost demand for real estate for as long as they are in place.

3) how we can control the effect

Being aware of current government incentives can help determine changes in supply and demand and identify potential false trends

-Interest rates
Politics, banks and the global economy can all influence the real estate market when it comes to interest rates. The real estate crash of 2007 proved the global impact of the real estate market and increased awareness of how interest rates and loans are used in home buying. If things aren’t looking good abroad, it might affect your ability to sell homes domestically. Keep an eye on what’s happening in the global market and with foreign investment as these play large roles into the expectations of the local market as well.

-Demographics
Knowledge of demographic factors such as age, race, gender and median income of a particular area will help you anticipate market trends and better position your homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips you to show the neighborhood to the appropriate buyer. And though you’d think an area with a bunch of new college grads would be a prime market in which to sell homes, recent grads are often too tied up in student loans to be serious candidates for a new house.

3.How can you control the effect
- Can be controlled if the state government cooperates in lowering the land premium including development charges incurred by the developer.
-The government is obliged to intervene in the Malaysian property market rather than just imposing higher property tax rates but also dare to control the price of the house.
-The government's courage to control the price of houses by setting the price of the ceiling will definitely be supported by the majority of the people.
- The activity of property speculators in influencing market prices should be stopped immediately.The government is advised to restrict the activities of club real estate investors who purchase simultaneous properties simultaneously from developers, where they earn a 20-30% discount.After purchasing, they will then resell the purchased home to the buyer at the current market price which would impose the buyer.The government should also implement a special policy for the purchase of affordable housing to protect the property market from the 'interventions' of speculators.

 

https://www.investopedia.com/articles/mortages-real-estate/11/factors-affecting-real-estate-market.asp#ixzz50FnIhVav 

NORASHIMA BINTI RAFINI 

AP140101 

 

1)       Demographics 

Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades. 

2)       Interest Rates 

Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

3)       The Economy 

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate. 

4)       Government Policies/Subsidies 

Legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends. 

While some buyers actively seek out fixer-upper properties, most home buyers prefer a house that is move-in ready –  and they are willing to pay a reasonable premium for that comfort
2. Inspection report

In some hot markets, buyers may forego their right to an inspection report but that’s a risk that most mortgage lenders won’t underwrite. For most buyers, mortgage financing is contingent on a favorable inspection (the banks don’t want to lend you money for a termite farm). Even if a home is under contract, the inspection report can greatly impact the price of the home (usually downwards as the buyer uncovers previously unknown/undisclosed issues that require repairs). The more recommended repairs on the report, the more negotiating room a buyer has.
3.Neighbourhood comps

Comparable properties, sometimes called “comps”, sold in your area also impact your own home’s market value. Appraisers and real estate agents look at recent sales of homes with similar features to use as a benchmark against your home’s potential price. Foreclosures and short sales often complicate things because they tend to sell at lower prices, decreasing the neighborhood’s overall average sales price
4.Appraisal value

Whenever a loan is involved in the financing of a property purchase or home equity borrowing, an appraisal is almost always required. Most lenders won’t approve a loan for more than the appraised amount, so if the assessed value falls short the seller either needs to lower the price or the buyer needs to put extra money down to decrease the loan amount.

It seems like every real estate downturn gets blamed on the economy. The state of the economy plays a huge part in the amount of money that is available for people to buy homes. Factors such as politics and natural gas and oil production contribute to the state of the economy and, in turn, the real estate market. For example, if politicians are feuding over financial conditions, the real estate market could be affected as result of the dispute.

Interest rates
Politics, banks and the global economy can all influence the real estate market when it comes to interest rates. The real estate crash of 2007 proved the global impact of the real estate market and increased awareness of how interest rates and loans are used in home buying. If things aren’t looking good abroad, it might affect your ability to sell homes domestically. Keep an eye on what’s happening in the global market and with foreign investment as these play large roles into the expectations of the local market as well.

Knowledge of demographic factors such as age, race, gender and median income of a particular area will help you anticipate market trends and better position your homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips you to show the neighborhood to the appropriate buyer. And though you’d think an area with a bunch of new college grads would be a prime market in which to sell homes, recent grads are often too tied up in student loans to be serious candidates for a new house.

 

The economy 

It seems like every real estate downturn gets blamed on the economy. There is a reason for this. The state of the economy plays a huge part in the amount of money that is available for people to buy homes. Factors such as politics and natural gas and oil production contribute to the state of the economy and, in turn, the real estate market. For example, if politicians are feuding over financial conditions, the real estate market could be affected as result of the dispute. 

Interest rates 

Politics, banks and the global economy can all influence the real estate market when it comes to interest rates. The real estate crash of 2007 proved the global impact of the real estate market and increased awareness of how interest rates and loans are used in home buying. If things aren’t looking good abroad, it might affect your ability to sell homes domestically. Keep an eye on what’s happening in the global market and with foreign investment as these play large roles into the expectations of the local market as well.
 

Demographics 

Knowledge of demographic factors such as age, race, gender and median income of a particular area will help you anticipate market trends and better position your homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips you to show the neighborhood to the appropriate buyer. And though you’d think an area with a bunch of new college grads would be a prime market in which to sell homes, recent grads are often too tied up in student loans to be serious candidates for a new house. 

Working in real estate can be difficult but knowing how to anticipate its ups and downs can protect you when things turn south. Keep these factors in mind the next time you start prospecting for new buyers and you’ll have an advantage over other agents who simply don’t plan ahead. 

 

- https://www.economicshelp.org/blog/377/housing/factors-that-affect-the-housing-market/

-  https://www.investopedia.com/articles/mortages-real-estate/11/factors-affecting-real-estate-market.asp

- http://www.realestateinsidermag.com/business-tips/factors-affect-real-estate-market/

1) What Is The Element  2) How It Affect The Market

·         Property Location

The position of a strategic property greatly influences the value of the property where it is close to various facilities and good amenities, it will increase the value of the property such as quality of local schools is often the single most important factor for buyers with children of school-going age, proximity to local employment opportunities is a very high priority for most employment-age buyers and proximity to social, shopping and recreational centers is valued most by younger buyers but plays an important role in pricing for all homebuyers.

 

·         Economy

It could give the impacts in the real estate market as consumers’ ability to support housing prices largely depends on key factors like Gross Domestic Product (GDP), unemployment, and income growth. It seems like every real estate downturn gets blamed on the economy. There is a reason for this. The state of the economy plays a huge part in the amount of money that is available for people to buy homes.

 

·         Interest Rate

Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

3) How You Can Control The Effect

- The government should tighten the law and, make a new and improve the policy based on the current situation 

- Make a review about the existing of the legislation that can have a sizable impact on property demand and prices such as tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. 

-Consumers should being aware of current government incentives that can help them to determine changes in supply and demand and identify potentially false trends. 

1. Net population growth (including migration). This is a big one in Australia, with our population projected to grow exponentially over the coming years, placing increased pressure on an already undersupplied housing market. It’s expected that increased demand from migration will be the primary driver for our property markets into the future, as we already have too few dwellings to house our population. Many experts and economists predict this intensity of demand will prevent Australia’s property markets from experiencing any sustained crash in values.

2. Dwelling construction. Directly related to our growing population and housing shortage is the rate of new dwelling construction. In slower markets, profit margins tend to shrink as building expenses continue to increase while buyer demand dries up, making large developments a lot less attractive.

This almost seasonal viability of large construction projects means building them can slow down or conversely, speed up considerably if the markets are hot with buyer activity. This issue of tightening housing supply obviously correlates with heightened demand from our growing population to maintain pressure on property prices in the long term.

3. Wages growth and employment. The way human nature works, when we perceive things to be good because wages are on the rise and unemployment levels are low, consumer confidence is at its peak and people are willing to spend their money. Often in this type of fruitful economic environment people are more willing to take on debt and make large financial commitments such as buying property. This in turn means an increase in demand that pushes property values up. Of course the contrary is also true. When wage growth slows and unemployment rises we start to question our financial security and become unwilling to part with our money, meaning demand decelerates and values naturally come off the boil.

4. Access to finance. This is a really interesting macro factor here in Australia. During 2008’s GFC we saw the US property market take an almighty dive; pushed too far because of easy access to finance. Money was being handed out like candy, which poured a huge amount of capital into the system and buoyed the local market for some time.

Of course things came to a head when people who should never have qualified for a loan in the first instance simply stopped making their repayments because they could no longer afford them. Much the same occurred in the UK. Then this frivolous borrowing went the other way, to the point where there was almost no access to finance. This caused the US and UK housing markets to come to a screaming halt.

Therefore, it’s obvious that access (or a lack thereof) to credit is an important macro driver of our property market in Australia too – if the banks refuse to play, real estate sales will invariably slow..

5. Government policy. A great example of how government policy can change the supply/demand balance in our housing markets is the First Home Owners’ Grant. With the introduction of the grant at the beginning of this decade we saw the start of one of the largest property booms in our history (the grant was not solely responsible for the boom of course). The enticement of ‘free’ money was too much for some people and many new homebuyers entered the market all at once, intensifying demand levels substantially.

Then when the Federal Government doubled the incentive in 2008/09 (First Home Boost), we saw the more affordable sectors of our housing markets (that traditionally appeal to first home buyers), enjoy a mini-boom of sorts as thousands of young house hunters took advantage of the handout to live their own Great Australian Dream.

Most Australians have a lot of their household wealth tied up in property (more so than in many other countries). This is why the government will always try to help the property market with policy. Nothing destroys consumer confidence more than people seeing the value of their homes plummet. Nothing hurts economies more than drastic falls in consumer confidence. You get my drift?

6. Land supply. Logically, when there is a glut of developable land available, price growth within that housing market will be somewhat restricted. This often occurs in outer urban areas where there are vast tracts of land. Conversely, in those areas where land is scarce and development is restricted, whether it be by natural forces such as the water in coastal regions, local government planning regulations or simply the fact that there is no more land to develop such as in inner-city areas, supply constraints often underpin property values and insulate them from severe falls.

7. Investment in infrastructure. When local, state or federal governments are spending money in a particular area you can generally rest assured that local property values will hold their own over the long term. Investment in an area, through new infrastructure works and by private enterprise, is always a good indication that population growth is expected to continue, which in turn means the underlying demand for property will continue. 

MICRO FACTORS

 

8. Location to amenities. Communities naturally require certain services and amenities to sustain them over the long term. Not only do these amenities make an area more liveable, they also provide critical employment opportunities for local residents. Important amenities that can make or break the long-term viability of an area in terms of underlying demand and therefore the stability of local housing values, include things such as schools and child care, public transport, access to major arterial roads, shops (particularly supermarkets and shopping centres), hospitals (health care), parks and water supplies.

9. Council planning regulation. This can include things such as restriction on development, which again will directly affect the local housing supply and, therefore, property values over the long term.

10. Streetscape. Let’s face it; some areas are just nicer than others. Obviously, the greater the aesthetic appeal of an area, the greater the underlying demand for housing will be.

11. Block orientation and views. It is said that a good view will nearly always command a higher price when it comes to real estate. Some properties will always be in greater demand because of their outlook and/or how they are situated on the block. For instance, it is well known that a north-south orientation makes far better use of that natural and free resource – the sun.

12. Architectural style. Not only is scarcity value in property determined by the overall land supply of an area, it is also influenced largely by architectural style. Buildings that cannot be easily replicated, particularly those whose design elements hinge on a specific bygone era, will always be in greater demand and shorter supply than their generic counterparts. Styles such as art deco and period homes like Edwardian and Victorian are simply not built any more. These properties take on a rarity value in much the same way as antiquities and in almost every case will maintain their value into the future.

13. Floor plan. A good floor plan, where all the space is used and flows harmoniously, will always be easier to sell than a disjointed, unliveable one. Something as simple as bedroom and bathroom positioning in relation to the living areas can make a house more or less desirable and hence, increase or decrease buyer demand. 

Demographics

Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades.

For example, the baby boomers who were born between 1945 and 1964 are an example of a demographic trend with the potential to significantly influence the real estate market. The transition of these baby boomers to retirement is one of the more interesting generational trends in the last century, and the retirement of these baby boomers, which began back in 2010, is bound to be noticed in the market for decades to come. (For more on the baby-boomer trend, see Boomers: Twisting The Retirement Mindset.)

There are numerous ways this type of demographic shift can affect the real estate market, but for an investor, some key questions to ask might be: i) How would this affect the demand for second homes in popular vacation areas as more people start to retire? Or ii) How would this affect the demand for larger homes if incomes are smaller and the children have all moved out? These and other questions can help investors narrow down the type and location of potentially desirable real estate investments long before the trend has started.

Interest Rates 

Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

 

It's important to note that as interest rates rise, the cost to obtain a mortgage increases, thus lowering demand and prices of real estate. However, when looking at the impact of interest rates on an equity investment such as a real estate investment trust (REIT), rather than on residential real estate, the relationship can be thought of as similar to a bond's relationship with interest rates. When interest rates decline, the value of a bond goes up because its coupon rate becomes more desirable, and when interest rates increase, the value of bonds decrease. Similarly, when the interest rate decreases in the market, REITs' high yields become more attractive and their value goes up. When interest rates increase, the yield on an REIT becomes less attractive and it pushes their value down. (To learn more about these effects, see How Interest Rates Affect Property Values.)

The Economy

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate.

However, the cyclicality of the economy can have varying effects on different types of real estate. For example, if an REIT has a larger percentage of its investments in hotels, they would typically be more affected by an economic downturn than an REIT that had invested in office buildings. Hotels are a form of property that is very sensitive to economic activity due to the type of lease structure inherent in the business. Renting a hotel room can be thought of as a form of short-term lease that can be easily avoided by hotel customers should the economy be doing poorly. On the other hand, office tenants generally have longer-term leases that can't be changed in the middle of an economic downturn. Thus, although you should be aware of the part of the cycle the economy is in, you should also be cognizant of the real estate property's sensitivity to the economic cycle.

Government Policies/Subsidies

Legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends. For example, in 2009, the U.S. government introduced a first-time homebuyer's tax credit to homeowners in an attempt to jump-start home sales in a sluggish economy (only those who purchased homes between 2008-2010 is eligible). According to the National Association of Realtors (NAR), this tax incentive alone led to 900,000 homebuyers to buy homes. This was quite a sizable increase, although temporary, and without knowing the increase was a result of the tax incentive, you may have ended up concluding that the demand for housing was going up based on other factors.

Source: http://resources.point.com/8-biggest-factors-affect-real-estate-prices/ 

              http://www.realestateinsidermag.com/business-tips/factors-affect-real-estate-market/ 

 

1) What is the element? 

- Appraisal value 

- Ecnomic indicators 

- Neighborhood comps 

- Demographics 

 

2) How it affect the market? 

Appraisal value 

- The appraisal is the real estate industry’s formal process for pricing a property. All states require appraisers which for any federally regulated lender be licensed or certified by an organization accredited by the Appraiser Qualifications Board (AQB). Whenever a loan is involved in the financing of a property purchase or home equity borrowing, an appraisal is almost always required. Most lenders won’t approve a loan for more than the appraised amount, so if the assessed value falls short the seller either needs to lower the price or the buyer needs to put extra money down to decrease the loan amount. Additionally, if the appraiser deems there is a structural issue such as a faulty roof or termite damage, the bank will not approve the loan until the issues are fixed – most often at the expense of the seller. Appraisers follow a structured process for evaluating the property by looking at recent comparable sales (see above) to establish a benchmark price and then adjusting the price up or down according to the upgrades and improvements you have or have not made relative to the comparable properties. 

 

Economic indicators 

- The strength of the overall economy significantly impacts the real estate market as consumers’ ability to support housing prices largely depends on key factors like GDP, unemployment, and income growth. The Great Recession from 2008 to 2012 underscored the link between real estate and the broader economy. Local economies with a large number of real estate-related jobs (whether in construction or mortgage financing) experienced significant property price depreciation. Other local macro-trends can outsize national factors in their importance; for example, California’s income growth rate came in at 1.2% in the first quarter of 2015 compared to the national average of 0.9%. This gives buyers the ability to spend more on housing, consequently increasing real estate prices. 

 

Neighborhood ‘comps’ 

- Comparable properties, sometimes called “comps”, sold in other area also impact a home’s market value. Appraisers and real estate agents look at recent sales of homes with similar features to use as a benchmark against home’s potential price. Foreclosures and short sales often complicate things because they tend to sell at lower prices, decreasing the neighborhood’s overall average sales price. Comps and along with offer details are usually the key driver for the appraisal process, where most appraisers will rely heavily on recent nearby transactions on homes of a similar size to other bought. 

 

Demographics 

- Knowledge of demographic factors such as age, race, gender and median income of a particular area will help people to anticipate market trends and better position their homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips to show the neighborhood to the appropriate buyer. And though they’d think an area with a bunch of new college grads would be a prime market in which to sell homes, recent grads are often too tied up in student loans to be serious candidates for a new house. 

 

3) How you can control the effect? 

Real estate prices are deeply cyclical and much of it is dependent on factors we can’t control. Whether we plan on buying a new property or want to use the equity in our home for other expenses, it is important to analyze both broader market conditions and our specific property to determine how the home’s value may fare over the course of time. By using law and policies that have been made by government, we can control the real estste market. If not, the house price will increase and affect the affordability of home buyers. 

Source: https://www.investopedia.com/articles/mortages-real-estate/11/factors-affecting-real-estate-market.asp 

Factors affecting real estate market 

1. Demographic 

Demographic are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades. 

2. Economy 

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity and the prices of goods. Broadly speaking, when the economy is sluggish, so is real estate. However, the cyclicality of the economy can have varying effects on different types of real estate. For example, if an REIT has a larger percentage of its investments in hotels, they would typically be more affected by an economic downturn than an REIT that had invested in office buildings. It is important to recognize the real estate property's sensitivity to the economic cycle. 

3. Government policies/subsidies 

Legislation is also another factor that can have a sizable impact on property demand and prices. Tax, credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends. For example, in 2009, the U.S. government introduced a first-time homebuyer's tax credit to homeowners in an attempt to jump-start home sales in a sluggish economy. 

4. Interest rate 

Interest rate is also one of the factors affecting real estate market. If buyer considering buying a home with a mortgage or loan it is beneficial to research interest rates using a mortgage or loan calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage or loan to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. But as interest rates rise, the cost to obtain a mortgage or loan increases, thus lowering the demand and prices of real estate. 

It seems like every real estate downturn gets blamed on the economy. There is a reason for this. The state of the economy plays a huge part in the amount of money that is available for people to buy homes. Factors such as politics and natural gas and oil production contribute to the state of the economy and, in turn, the real estate market. For example, if politicians are feuding over financial conditions, the real estate market could be affected as result of the dispute.

Politics, banks and the global economy can all influence the real estate market when it comes to interest rates. The real estate crash of 2007 proved the global impact of the real estate market and increased awareness of how interest rates and loans are used in home buying. If things aren’t looking good abroad, it might affect your ability to sell homes domestically. Keep an eye on what’s happening in the global market and with foreign investment as these play large roles into the expectations of the local market as well.

Knowledge of demographic factors such as age, race, gender and median income of a particular area will help you anticipate market trends and better position your homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips you to show the neighborhood to the appropriate buyer. And though you’d think an area with a bunch of new college grads would be a prime market in which to sell homes, recent grads are often too tied up in student loans to be serious candidates for a new house. 

How to control the effect?
we can control it by government interfere foe example increase the property taxes

Factors affecting real estate market 

1) Demographics 

Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades. 

For example, the baby boomers who were born between 1945 and 1964 are an example of a demographic trend with the potential to significantly influence the real estate market. The transition of these baby boomers to retirement is one of the more interesting generational trends in the last century, and the retirement of these baby boomers, which began back in 2010, is bound to be noticed in the market for decades to come. 

2) Interest Rates 

Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage or loan it is beneficial to research interest rates using a mortgage or loan calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage or loan to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

It's important to note that as interest rates rise, the cost to obtain a mortgage or loan increases, thus lowering demand and prices of real estate. However, when looking at the impact of interest rates on an equity investment such as a real estate investment trust (REIT), rather than on residential real estate, the relationship can be thought of as similar to a bond's relationship with interest rates. When interest rates decline, the value of a bond goes up because its coupon rate becomes more desirable, and when interest rates increase, the value of bonds decrease. Similarly, when the interest rate decreases in the market, REITs' high yields become more attractive and their value goes up. When interest rates increase, the yield on an REIT becomes less attractive and it pushes their value down. 

 

3) The Economy 

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate. 

However, the cyclicality of the economy can have varying effects on different types of real estate. For example, if an REIT has a larger percentage of its investments in hotels, they would typically be more affected by an economic downturn than an REIT that had invested in office buildings. Hotels are a form of property that is very sensitive to economic activity due to the type of lease structure inherent in the business. Renting a hotel room can be thought of as a form of short-term lease that can be easily avoided by hotel customers should the economy be doing poorly. On the other hand, office tenants generally have longer-term leases that can't be changed in the middle of an economic downturn. Thus, although you should be aware of the part of the cycle the economy is in, you should also be cognizant of the real estate property's sensitivity to the economic cylce. 

4) Government Policies/Subsidies 

Legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends. 

https://www.investopedia.com/articles/mortages-real-estate/11/factors-affecting-real-estate-market.asp 

1)    Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades. 

2)    Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

3)     Economic, the cyclicality of the economy can have varying effects on different types of real estate. For example, if an REIT has a larger percentage of its investments in hotels, they would typically be more affected by an economic downturn than an REIT that had invested in office buildings.

4)    Legislation, factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for can help you determine changes in supply and demand and identify potentially false trends.real estate for as long as they are in place. Being aware of current government incentives.
 
 
 

Refereces 

-  http://www.realestateinsidermag.com/business-tips/factors-affect-real-estate-market/ 

-  http://www.rapidpropertyconnect.com/how-does-the-economy-affect-the-malaysia-housing-market/ 

- http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.869.4372&rep=rep1&type=pdf 

 

Please identify factors affecting real estate market in Malaysia. Explain about the element: 

 1. What is the element? 

        i.            The economy 

It seems like every real estate downturn gets blamed on the economy. There is a reason for this. The state of the economy plays a huge part in the amount of money that is available for people to buy homes. Factors such as politics and natural gas and oil production contribute to the state of the economy and, in turn, the real estate market. For example, if politicians are feuding over financial conditions, the real estate market could be affected as result of the dispute. 

      ii.            Interest rates 

Politics, banks and the global economy can all influence the real estate market when it comes to interest rates. The real estate crash of 2007 proved the global impact of the real estate market and increased awareness of how interest rates and loans are used in home buying. If things aren’t looking good abroad, it might affect your ability to sell homes domestically. Keep an eye on what’s happening in the global market and with foreign investment as these play large roles into the expectations of the local market as well. 

    iii.            Demographics 

Knowledge of demographic factors such as age, race, gender and median income of a particular area will help you anticipate market trends and better position your homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips you to show the neighborhood to the appropriate buyer. 

 2. How it affect the market? 

        i.            Interest Rates 

Interest Rates have a major impact on real estate markets as changes in interest rates will affect a person’s ability to purchase property.If the interest rate, the cost to obtain a mortgage for home purchase decresas. Then there will be higher demand for roperties. Hence, prices will rise. 

      ii.            Unemployment 

When unemployment rises (which is exactly what’s happening in Malaysia’s market right now, retrenchments from major financial institutions and MNCs companies), less people will be able to afford a house and worst case scenario, some even have problem paying their monthly mortgage repayments. Those who lose their job may end up with their home repossess. The fear of unemployment may discourage people from entering into property market. 

    iii.            Consumer confidence 

Buyer’s confidence is important for determining whether people want to take the risk of investing hence expectations towards the housing market is important; if people fear that house prices could fall due to bad economic condition, then they will tend to have “Wait and See” mentality by deferring to buy a property. 

    iv.            Mortgage availability 

During the boom years, many banks were very keen to lend mortgages. The ease of getting a mortgage increases demand for properties hence affecting the property prices to rise due to strong demand. However, when times are bad, banks reacted the opposite way by tightening their lending criteria, which reduced the availability of mortgages. For those who do not have strong financial track record will probably face some issues in obtaining loans from banks. 

      v.            Supply vs. Demand 

In general, when supply greater than demand, property prices tends to be stagnant or even falls (this largely depends on the location) & vice versa. More attractive packages/ rebates will be available in the market when there is oversupply of properties. Real estate consultancy firm Knight Frank Malaysia foresees more high-end condominium projects in Kuala Lumpur that were originally scheduled for launch by 1H2016 being deferred owing to the large amount of incoming supply and poor market sentiment (source: TheEdge Property). 

    vi.            The Property 

Location – Availability of shopping centres, shoplots and hypermarkets nearby definitely adds value to the premise. 

Tenure – Freehold properties generally fetch higher price tag as compared to leasehold properties. 

Infrastructure – Properties located near to bus station/ MRT/ LRT/ Monorails/ major highways will definitely influence the price of the property. 

Future Development – Properties prices will go up in value if there is massive upcoming development in the area. 

Security – With current economic condition and rising crime rates in Malaysia, any housing with added security becomes a necessity. A premium can be added to the housing price if the community is fully secured. 

vii.  The Economy 

Lastly, one main key factor that affects the value of real estate is the overall health of the economy (contributed by factors such as GDP, employment data, government policies & subsidies, prices of goods, petrol prices etc). In Malaysia right now, the economy is slowing and the ringgit is depreciating. Cost of living increases. House prices continue to rise, though at much slower pace. Property transactions and building construction activities are slowing down dramatically. 

Home sales are directly linked to the economy’s health. Demand for housing is dependent upon income. With higher economic growth and income, people will be able to spend more on houses; this will increase demand and subsequently push up prices. 

3. How you can control the effect 

        i.            Policy Implications 

In general there are two key assumptions authorities can base their actions on. One is to assume that the property market is efficient and able to find the right equilibrium. The second assumption is that the property market is inherently inefficient and direct intervention is required. Government policy should be aimed at maintaining an orderly property market. Malaysia government via the central bank (BNM) has taken steps to ensure that a property bubble doesn’t develop in the residential property market. Care should also be taken to ensure that these measures do not result in an unordered drop in house price. As seen during the sub-prime housing crisis in the US, an unordered collapse in the housing market will quickly impact other segments of the economy. 

 

      ii.            Increase Market Efficiency 

If it is assumed that the market is efficient, then the best course of action for any authority is to not interfere with the market. Authorities should instead focus on increasing the efficiency of the property market. The property market can be made more efficient by improving transparency and reducing transaction cost. Transparency can be improved with the availability of timely, accurate and reliable property transaction data. The Malaysian government already makes available property data (such as MHPI) via the National Property Information Centre (NAPIC). This information is however is delayed by up to a quarter. The data is also not presented in a manner easily understood by the layman. The government could provide information up to date information on property transactions by area and house types. This would enable the layman and industry experts to have accurate and reliable data on actual transacted prices. Governments should also take steps to reduce the transaction cost in the property market. The cost of identifying and researching houses, time required to secure financing, legal cost, taxes (stamp duty) and moving cost are all examples of transactional cost from a buyer’s viewpoint. A seller has similar transaction cost related to identifying potential buyers (property agents are paid a percentage of the sales price) and tax (Real Property Gains Tax). Kenny (1998), highlights that transaction cost is a common argument presented to explain disequilibrium within the housing market. This would be in the time taken to complete a transaction and also additional cost in identifying and acquiring cost. In this view government should reduce the stamp duty and RPGT to reduce the overall transaction cost. 

Politics, banks and the global economy can all influence the real estate market when it comes to interest rates. The real estate have crash on 2007 to proved the global impact of the real estate market and increased awareness of how interest rates and loans are used in home buying. If the things aren’t looking good abroad, it might affect your ability to sell homes domestically. Keep an eye on what’s happening in the global market and with foreign investment as these play large roles into the expectations of the local market as well.

Demographics:

Knowledge of demographic factors such as age, race, gender and median income of a particular area will help you anticipate market trends and better position your homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips you to show the neighborhood to the appropriate buyer. .

3. How you can control the affect ?
By knowing the demographic data, we can make a strategy to relocate the property before start the construction. 

https://www.investopedia.com/articles/mortages-real-estate/11/factors-affecting-real-estate-market.asp 

1)    Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades. 

2)    Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

3)     Economic, the cyclicality of the economy can have varying effects on different types of real estate. For example, if an REIT has a larger percentage of its investments in hotels, they would typically be more affected by an economic downturn than an REIT that had invested in office buildings.

Legislation, factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for can help you determine changes in supply and demand and identify potentially false trends.real estate for as long as they are in place. Being aware of current government incentives.
 
 

 

a.      Demographics

Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades.

 

b.      Interest Rates 

Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

 

c.       The Economy

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate.

 

d.      Government Policies

Legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends. 

Interest Rates 

Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

 

It's important to note that as interest rates rise, the cost to obtain a mortgage increases, thus lowering demand and prices of real estate. However, when looking at the impact of interest rates on an equity investment such as a real estate investment trust (REIT), rather than on residential real estate, the relationship can be thought of as similar to a bond's relationship with interest rates. When interest rates decline, the value of a bond goes up because its coupon rate becomes more desirable, and when interest rates increase, the value of bonds decrease. Similarly, when the interest rate decreases in the market, REITs' high yields become more attractive and their value goes up. When interest rates increase, the yield on an REIT becomes less attractive and it pushes their value down. (To learn more about these effects, see How Interest Rates Affect Property Values.)

The Economy

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate.

However, the cyclicality of the economy can have varying effects on different types of real estate. For example, if an REIT has a larger percentage of its investments in hotels, they would typically be more affected by an economic downturn than an REIT that had invested in office buildings. Hotels are a form of property that is very sensitive to economic activity due to the type of lease structure inherent in the business. Renting a hotel room can be thought of as a form of short-term lease that can be easily avoided by hotel customers should the economy be doing poorly. On the other hand, office tenants generally have longer-term leases that can't be changed in the middle of an economic downturn. Thus, although you should be aware of the part of the cycle the economy is in, you should also be cognizant of the real estate property's sensitivity to the economic cycle.

Government Policies/Subsidies

Legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends. For example, in 2009, the U.S. government introduced a first-time homebuyer's tax credit to homeowners in an attempt to jump-start home sales in a sluggish economy (only those who purchased homes between 2008-2010 is eligible). According to the National Association of Realtors (NAR), this tax incentive alone led to 900,000 homebuyers to buy homes. This was quite a sizable increase, although temporary, and without knowing the increase was a result of the tax incentive, you may have ended up concluding that the demand for housing was going up based on other factors.

Read more: 4 Key Factors That Drive The Real Estate Market https://www.investopedia.com/articles/mortages-real-estate/11/factors-affecting-real-estate-market.asp#ixzz50G9ZevP4
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1.            What is the element?

        I.            Leasehold vs  Freehold

      II.            Location

    III.            Government policy

    IV.            Population

      V.            Accessibility

    VI.            Future Developer

2.            How it affect the market?

Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Whether you plan on buying a new property or want to use the equity in your home for other expenses, it is important to analyze both broader market conditions and your specific property to determine how the home’s value may fare over the course of time.

3.            How you can control the effect?

Government should implement and tightened laws to control property prices

The strength of the overall economy significantly impacts the real estate market as consumers’ ability to support housing prices largely depends on key factors like GDP, unemployment, and income growth. The Great Recession from 2008 to 2012 underscored the link between real estate and the broader economy. Local economies with a large number of real estate-related jobs (whether in construction or mortgage financing) experienced significant property price depreciation. Other local macro-trends can outsize national factors in their importance; for example, California’s income growth rate came in at 1.2% in the first quarter of 2015 compared to the national average of 0.9%. This gives buyers the ability to spend more on housing, consequently increasing real estate prices. 

Interest Rates
Interest rates affect the cost of monthly mortgage payments. A period of high-interest rates will increase cost of mortgage payments and will cause lower demand for buying a house. High-interest rates make renting relatively more attractive compared to buying. Interest rates have a bigger effect if homeowners have large variable mortgages. For example, in 1990-92, the sharp rise in interest rates caused a very steep fall in UK house prices because many homeowners couldn’t afford the rise in interest rates. As a result, it influence the purchasing trend in real estate market. 

Knowledge of demographic factors such as age, race, gender and median income of a particular area will help you anticipate market trends and better position your homes for sale. Knowing whether an area is home to an aging population or is attractive to young families better equips you to show the neighborhood to the appropriate buyer. And though you’d think an area with a bunch of new college grads would be a prime market in which to sell homes, recent grads are often too tied up in student loans to be serious candidates for a new house.

Land Supply
Logically, when there is a glut of developable land available, price growth within that housing market will be somewhat restricted. This often occurs in outer urban areas where there are vast tracts of land. Conversely, in those areas where land is scarce and development is restricted, whether it be by natural forces such as the water in coastal regions, local government planning regulations or simply the fact that there is no more land to develop such as in inner-city areas, supply constraints often underpin property values and insulate them from severe falls.

Consumer Confidence
 Confidence is important for determining whether people want to take the risk of taking out a mortgage. In particular expectations towards the housing market is important; if people fear house prices could fall, people will defer buying, hence affect the performance of real estate market.

Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades.

Interest rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

 

Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicators such as the GDP, employment data, manufacturing activity, the prices of goods, etc. 

Legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine changes in supply and demand and identify potentially false trends. For example, in 2009, the U.S. government introduced a first time homebuyer's tax credit to homeowners in an attempt to jump-start home sales in a sluggish economy (only those who purchased homes between 2008-2010 is eligible). According to the National Associaton of Realtors (NAR), this tax incentive alone led to 900,000 homebuyers to buy homes. This was quite a sizable increase, although temporary, and without knowing the increase was a result of the tax incentive, you may have ended up concluding that the demand for housing was going up based on other factors.

2.  How it affect the market?

Demographics

Demographics can be the most important factor affecting real estate market. The baby boomers were born between 1945 and 1964 are an example of a demographic trend with the potential to significantly influence the real estate market. The transition of these baby boomers to retirement is one of the more interesting generational trends in the last century, and the retirement of these baby boomers, which began back in 2010, is bound to be noticed in the market for decades to come. 

There are numerous ways this type of demographic shift can affect the real estate market, but for an investor, some key questions to ask might be: i) How would this affect the demand for second homes in popular vacation areas as more people start to retire? Or ii) How would this affect the demand for larger homes if incomes are smaller and the children have all moved out? These and other questions can help investors narrow down the type and location of potentially desirable real estate investments long before the trend has started.

Interest Rates

It's important to note that as interest rates rise, the cost to obtain a mortgage increases, thus lowering demand and prices of real estate. However, when looking at the impact of interest rates on an equity investment such as a real estate investment trust (REIT), rather than on residential real estate, the relationship can be thought of as similar to a bond's relationship with interest rates. When interest rates decline, the value of a bond goes up because its coupon rate becomes more desirable, and when interest rates increase, the value of bonds decrease. Similarly, when the interest rate decreases in the market, REITs' high yields become more attractive and their value goes up. When interest rates increase, the yield on an REIT becomes less attractive and it pushes their value down.

The Economy

When the economy is sluggish, so is real estate. However, the cyclicality of the economy can have varying effects on different types of real estate. For example, if an REIT has a larger percentage of its investments in hotels, they would typically be more affected by an economic downturn than an REIT that had invested in office buildings. Hotels are a form of property that is very sensitive to economic activity due to the type of lease structure inherent in the business. Renting a hotel room can be thought of as a form of short-term lease that can be easily avoided by hotel customers should the economy be doing poorly. On the other hand, office tenants generally have longer-term leases that can't be changed in the middle of an economic downturn. Thus, although you should be aware of the part of the cycle the economy is in, you should also be cognizant of the real estate property's sensitivity to the economic cycle.

Government Policies/Subsidies

Government can introduce policies that can affect the real estate market. Such policies include fiscal policy, which is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.  Fiscal policy is based on the theories of British economist John Maynard Keynes. Also known as Keynesian economics, this theory basically states that governments can influence macroeconomic productivity levels by increasing or decreasing tax levels and public spending. This influence, in turn, curbs inflation (generally considered to be healthy when between 2-3%), increases employment and maintains a healthy value of money. Fiscal policy is very important to the economy.

3.  How you can control the effect?

We, the people is able to control and minimize the effect of a bad economy by going against the cyclicality and trend of the economy.If a certain kind of property is very expensive during a certain cycle of the economy then the other property will become relatively cheaper. For example, if everyone is investing in REIT because they feel it gives the best return then some people will be willing to give up some of their property at a cheaper price to invest in REIT. It would be the better decision to buy this properties at a cheaper price, countering the trend of the economy.

Government is able to introduce policies to control the real estate market. For example, the idea of fiscal policy is to find a balance between changing tax rates and public spending. For example, stimulating a stagnant economy by increasing spending or lowering taxes runs the risk of causing inflation to rise. This is because an increase in the amount of money in the economy, followed by an increase in consumer demand, can result in a decrease in the value of money - meaning that it would take more money to buy something that has not changed in value.

When more new developments have fully adopted the IBS method, the mismatch between affordable housing and supply can be eased, and in turn, create more opportunities for low and middle-income earners to purchase properties.

Demographics are the data that describes the composition of a population, such as age, race, gender, income, migration patterns and population growth. These statistics are an often overlooked but significant factor that affects how real estate is priced and what types of properties are in demand. Major shifts in the demographics of a nation can have a large impact on real estate trends for several decades.

Interest Rates
Interest Rates also have a major impact on the real estate markets. If you're considering buying a home with a mortgage it is beneficial to research interest rates using a mortgage calculator. Changes in interest rates can greatly influence a person's ability to purchase a residential property. That is because the lower interest rates go, the lower the cost to obtain a mortgage to buy a home will be, which creates a higher demand for real estate, which again pushes prices up. 

It's important to note that as interest rates rise, the cost to obtain a mortgage increases, thus lowering demand and prices of real estate. However, when looking 


Economy
Another key factor that affects the value of real estate is the overall health of the economy. This is generally measured by economic indicator such as the GDP, employment data, manufacturing activity, the prices of goods, etc. Broadly speaking, when the economy is sluggish, so is real estate.


Government Policies/Subsidies
Legislation is also another factor that can have a sizable impact on property demand and prices. Tax credits, deductions and subsidies are some of the ways the government can temporarily boost demand for real estate for as long as they are in place. Being aware of current government incentives can help you determine change in supply and demand and identify potentially false trends. For example, in 2009, the U.S. government introduced a first time home-buyer tax credit to homeowners in an attempt to jump-start home sales in a sluggish economy (only those who purchased homes between 2008-2010 is eligible). According to the National Association Realtors (NAR), this tax incentive alone led to 900,000 home buyers to buy homes. This was quite a sizable increase, although temporary, and without knowing the increase was a result of the tax incentive, you may have ended up concluding that the demand for housing was going up based on other factors.