Real estate market refers to the economic environment that determines prices for real estate. It consists of a complex network of participants including brokers, buyers, sellers and lenders. Real estate is a highly unique good that can be difficult to buy or sell and is illiquid (it takes time and effort to convert into cash). This complexity makes the real estate market more volatile than typical markets.
The real estate market encompasses residential, commercial and industrial properties. Residential real estate refers to structures designed for individual or family living, such as single-family homes and condos. Commercial property includes retail spaces, office buildings and hotels. Industrial real estate consists of warehouses and manufacturing facilities. Each segment has its own characteristics, market drivers and investment opportunities.
Several factors influence real estate market trends, with some having a greater impact than others. For example, economic factors such as GDP growth and employment rates can impact demand for and supply of real estate, influencing price changes (Colliers International, 2021). Other factors include government policies and interest rates, which can affect the cost of borrowing and therefore purchasing power, as well as the profitability of investments in the sector (World Bank, 2020).
Additionally, demographic shifts can influence real estate market trends, with changes in population growth and migration patterns altering household composition and thus property prices. Other key real estate market trends include the use of technology in construction, which can reduce building costs and accelerate project completion times (World Economic Forum, 2019). The real estate market is an attractive investment opportunity for individuals who wish to invest in a stable asset with a high return potential. Individuals can invest in real estate through homeownership, investment or rental properties, and through real estate funds, which are a collection of properties managed by professional investors (World Economic Forum, 2019).