Anyone thinking about buying a property will have many concerns. The question of how to get the biggest return from their investment is always top of the list. Investors are also concerned with which market to invest in and whether it will be ready for them when they are. It’s challenging to identify where prices might be going in the future and make predictions about what may influence them.
Reputable estate agents Tenerife assist investors in marketing and selling properties; they ensure they sell the investment according to the market prices. Read to learn four factors that will influence the property market in 2023.
The Economy
The economy affects how much people earn, whether they have enough money to buy properties, and how much they are willing to pay. There is an economic downturn in 2023; many businesses are not doing well financially. Or there is also an economic recession where many businesses are closing down permanently due to low sales volume.
When this happens, people lose their jobs, leading to homelessness or even death if they cannot afford their basic needs, such as food and shelter, because there aren’t enough jobs available for everyone.
Interest Rates
Interest rates affect supply and demand by making it more expensive or less expensive for buyers to purchase homes with mortgages. Interest rate is the money a financial institution charges for borrowing.
For example, if you take a house mortgage, the bank will charge you interest on the money you earn. The higher the interest rate, the more expensive it is to borrow money and vice versa.
When interest rates are low, people buy more houses because they can afford them. It causes prices to rise because more buyers are in the market than sellers. When interest rates are high, people don’t want to borrow money, so they sell fewer houses. It causes prices to fall because there aren’t enough buyers in the market compared with sellers.
In 2023, interest rates will increase to 3.6% in the property market by March; the average variable will be 6.48%.
Unemployment
This increase in the unemployment rate indicates a slowing economy and a decrease in consumer confidence, causing fewer people to purchase homes or invest in property development projects. The unemployment rate will reach 4.5% in 2023 from 3.5% in September 2022, meaning many people are out of work.
When more jobs are available, people feel more secure about their futures, which can lead them to make more investments. For example, if you’re thinking about buying a home with your partner but worry about losing your job, you will wait until things look up before taking out a mortgage. However, if fewer people were out of work and more employment opportunities, you would feel more confident about purchasing a home.
Demographic Trends
As the population grows and ages, there will be an increase in demand for new homes and apartments. They need a place to live that can provide them with security and comfort.
Another demographic trend influencing the property market in 2023 is baby boomers moving back into cities. They want to live among younger people and enjoy their lifestyle while they still can. They also want to experience urban living while still having the energy.
What Affects Property Value?
The value of a property depends on several factors. These include:
- Location – Homes in desirable locations will be worth more than those in undesirable locations.
- Neighborhood – Homes in good neighborhoods are worth more than bad ones. It can be due to increased safety, better schools, and higher demand for quality housing.
- Condition – Newer homes sell at higher prices than older homes because they’re less likely to need expensive repairs down the road.
- Size – Homes with larger floor plans are worth more than smaller ones because they have more rooms and amenities that appeal to buyers looking for larger houses with lots of space for family activities.
- Supply and Demand. If there are many properties available in an area, there will be price competition between sellers, which will drive down the prices of these properties. On the other hand, if there aren’t many properties on the market, buyers will have more negotiating power with sellers regarding price.
Wide-ranging factors will impact the property market in 2023, with interest rates, employment trends, and current market sentiment all set to play a key role. It will be difficult for many people to get on the property ladder and may force them to rent indefinitely. The year may look challenging for investors, but the property market will be one to watch over the coming decade.
