The Evolution Of Estate Market In Our Current Economy
Real estate represents a significant feature of any economy. It constitutes people’s wealth especially for many homeowners in the UK. The real estate sector is divided into two; residential and commercial and includes buying and selling own real estate as well as renting, leasing and operating real estate. Below is a brief highlight of the evolution that the estate market has had over the years;
THE HISTORY
The history of the estate market in the past 30 years has been heavily characterised by a series of ups and downs. Demand for housing had consistently outstripped the supply. Way back in the ’80s, homeownership was on the rise as renting became less popular. Mortgages were readily available to the average citizen and the interest rates remained relatively low. Owning a home became a real aspiration among the working class. The ‘90s saw a growth in mortgage lending credited to the deregulation of the financial sector. More and more people were able to secure mortgages as they continued to develop strong confidence in the country’s economic growth. Unfortunately, in 1991, the economy was hit by a recession that caused a rise in unemployment, lower wages and incomes that saw people struggle to cope with their mortgage repayments and repossession quickly became a growing distress.
CURRENT STATE
Real estate especially in the UK represents the largest non-financial asset. Homeownership now is quite different than it was in the ‘80s and ’90s when the recession was ending and everything began to pick up again. 2020 to be precise has been a challenging year. So much has been happening across the world and this has had a huge impact on real estate. The focus of the property market has always been heavy on demographics. The supply of housing has not yet met the ever-increasing demand creating a housing bubble. Construction of new housing remains low whilst the population is only increasing. Hundreds of thousands of new modern properties are needed each year to meet this shortfall. For the majority of family homes, there are different amenities and devices to suit the style and needs of the owners. For instance, the functionality of a modern kitchen is a priority for the users and has to be incorporated during the design and construction.
THE FUTURE
Property experts predict the future of real estate will change considerably over the next few years and beyond. The market conditions remain unseasonably strong however, the current pandemic that is facing the globe at large is a cause of concern. This crisis has made a huge impact on real estate as it has changed the way people feel about their homes. Massive unemployment, wage cuts and job uncertainty has made people cautious before making huge investments in property such as buying a home. Interest rates on mortgages will still be on the low until the economy is close to normal again. Nevertheless, they shouldn’t be expected to hit rock bottom since lenders have a demand from current homeowners to refinance their mortgages but at lower rates. The future of real estate will be faced with some economic and social shifts in the industry that people need to be prepared for. Technology advancements and sustainability will be the key drivers of value. Cities around the world are working on making themselves the renters of wealth creation. The industry will offer a wide range of opportunities with high risk and return.
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