If you’re in need of tailored advice, our team of property experts can guide you through these shifts and patterns in greater depth. But first, take a read through our industry guide.
The economy and its impact
Economic conditions are a primary driver of real estate market trends. Factors such as interest rates, inflation, and employment levels play significant roles. Low-interest rates will usually encourage borrowing, making mortgages more affordable and increasing demand for homes. By contrast, high-interest rates can have an impact on the enthusiasm of buyers, leading to a slower level of market activity.
As inflation rises, the overall costs of services, building materials and workmanship will increase. This has a knock-on effect and leads to higher home prices. For investors, real estate can be a hedge against inflation, as property values and rents often rise with inflation.
The state of employment levels also has an impact on the housing industry. A strong job market with rising incomes boosts the confidence and purchasing power of prospective buyers, contributing to higher demand for properties.
Housing supply and demand
There’s a fluctuating balance between housing supply and demand that greatly influences prices and availability. A low supply of homes – “low inventory” – will lead to increased competition amongst buyers, which in turn drives up the prices. While an abundance of available homes will result in lower prices and more options for buyers.
You can notice whether supply is keeping pace with demand by the rate in which new housing is being constructed. There’s also several demographic shifts to consider, such as population growth, migration patterns and new generations entering the housing market.
The real estate market across different regions
The property industry is an inherently localaised one, with significant variations between regions, cities and neighborhoods. Areas with steady job growth and positive economic activity often experience stronger real estate markets. In addition, there’s been an increasing trend towards suburban and more rural living as remote work has become more commonplace. It can be interesting to consider the different trends in the regions you’ll be looking in – particularly if there are certain tax laws that attract businesses and workers, in turn boosting local real estate markets.
2025 and beyond
Several trends are shaping the real estate market in the mid 2020s. Increasing awareness of climate change and energy efficiency is driving buyer demand for sustainable and eco-conscious housing. Given the rising home prices, there’s also been a greater shift in the preference to rent – particularly amongst younger generations – which is keeping the lettings market competitive.
In the modern age, viewings and buying have also adapted to technological advances; you’ll find greater influence of virtual tours and online mortgage applications in the process. Finally, with ongoing economic uncertainties, interest rates remain a key factor to watch. Buyers should stay informed about potential rate changes, as they can significantly affect affordability and mortgage costs.
Stay informed
For those looking to purchase property, here are our practical golden rules:
- Do your research. Understand the local market conditions, including average prices, inventory levels, and neighborhood trends.
- Consider long-term value. It helps to look beyond the current market conditions and consider the future potential of the property, including factors like location, development plans and potential resale value.
- Get pre-approved. Secure a mortgage pre-approval to understand your budget and show sellers you’re a serious buyer.
- Work with professionals. The Ralph James lettings team can assist you in gathering relevant information about your search and assist with the complexities of buying property.
The property market is influenced by economic changes to regional trends and generational preferences. We are keenly in-tune with these industry dynamics and can help you to make confident buying decisions. Get in touch with our team today for a deeper understanding of the market and we’ll help navigate your property journey.
