Real Estate – Factors That Affect Its Demand and Supply

The real estate market is a place where people purchase property that they intend to use as their own personal property. Real estate includes all the real property including the lands, structures and the contents of it, together with its accompanying natural resources like water, crops or minerals; immovable real estate of this kind; and an obligation to pay money or another consideration, generally in exchange for the use of the real estate. Most real estate transactions take place in the form of buy-sell agreements and such other forms of legal contracts, but people also find it easy to sell real estate by holding property owners’ auctions. The various real estate markets include urban real estates, rural real estate, offshore real estate, foreclosure real estate and pre-construction real estate.

The supply of real estate commodities is greater than the demand. This means that there are more properties available than are being put into use. The supply is also affected by the laws of supply and demand, since changes in the supply of labor, materials and processing power can affect the supply of certain commodities. For instance, if more construction workers are needed to build real estate projects, the supply of construction workers will be greater than the demand for those commodities, causing prices of those commodities to go up.

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There are also general factors that affect the demand and supply of real estate. One such factor is the general state of the economy. The state of the economy has a profound effect on the demand and supply of real estate because the level of income or disposable income of a person or family dictates the amount of investment capital that he can afford to make. Another factor affecting the demand and supply of real estate is the political system of a country. When a country’s political system is unstable, the level of interest rates also vary, causing a variation in the supply and demand of real estate.