Property business in Pakistan is flourishing, and with its expansion, many people are getting involved in real estate. To succeed in the property sector, it is essential to know market tendencies and factors that might affect the market. Supply and demand are indicators that determine the prices of properties. If supply exceeds, then costs go down and vice versa. Besides price, several other factors affect the supply of goods and products, such as technology, fiscal policies, environmental factors, and purchasing capacity, etc., and many more.
In this blog, we will learn about factors that affect supply in the real estate market. If you are interested in investment or want to buy or sell a property, you must consider these factors before deciding.
Below mentioned are factors that affect supply in the real estate market.
Technology
Technology is changing our lifestyles. Adds quality and luxury to our lives. Further, it affects the pace of delivery and development and transforms living facilities. An innovation may increase the supply of products or may attract more investors, or after a brief nosedive, might escalate supply. Latest construction technologies have improved lifestyles and geared up the construction process. So, now less time is required to establish an infrastructure, and it boosts the supply in the market.
Government Policies
Government policies directly impact the supply and demand of goods and products. If the government reduces taxes and provides facilities, supply will likely increase, as happened recently when the incumbent government gave tax amnesties and a push to this sector; unprecedented growth has been recorded, and so has the supply of houses, apartments, and business centers. On the contrary, if the government increases taxes, there might be a supply shortage.
Mortgage Rates
For investment, business people and companies have to seek loans. If mortgage rates are higher, few people will borrow loans, and supply might be disturbed in the end. On the other hand, lower mortgage rates incite investors and thus increase productivity and supply in the market.
Overall Economic Situation
If a country’s economic situation is satisfactory, local and foreign investors will invest, and remittances will be used in business activities. So, it will escalate supply, but if the economic situation worsens, business activities will be shunned, and supply will decrease.
Monopolies
Cartelization exists in every sector, especially if the check and balance system does not work or authorities do not have a say. In this case, a few powerful people can manipulate the system by artificially increasing or decreasing the supply in the market for personal gains.
Demographics of a Particular Area
The number of people, their economic might, their mindset, and their interests directly or indirectly impact the supply and demand of goods and products. If people are rich and have investment tendencies, then supply might increase, but if people are rich or migrated from other areas, then demand will increase.
Environmental Factors
Calamities, floods, earthquakes, heavy rainfalls, and weather patterns also impact the supply of products in the market. Some may have short, or some have long-term impacts on the supply and demand of products. Recent floods in Pakistan intensified migration from flood-hit areas to other places. This migration boosted demand in some regions and augmented supply in many.
FAQs
Prices of properties, inflation, tax ratios, number of sellers and buyers are a few factors that can alter the supply in the property sector.
The inventory of houses, apartments, plots, shops, and offices available for sale is called supply in real estate.
