IS IT A GOOD TIME TO BUY REAL ESTATE?

Is there such thing as a real estate bubble and is it a good time to buy real estate? Yes or No!, whatever the answer may be is dependent on certain factors –economic factors, geographic factors and demographic factors– that influence the trend of real estate. Briefly, a real estate is a land property including everything it consists of (building, water, vegetation, soil). There are various types of real estate such as commercial real estate, industrial real estate and residential real estate; with residential property being the most prominent as the demand for home (whether leased or purchased) exceeds all other categories of real estate.

Buying or investing real estate is a common way to store wealth in forms of assets, investing in real estate involves buying land properties for whatever purpose they suit (home purpose, business purpose, raw purpose or special purpose). It is therefore important to know the status and trend of the real estate market before investing.

The world real estate market is currently stable and it isn’t expected to fall anytime soon. It escalated from $369.447billion in 2022 to $397.618billion in 2023 at a Compound Annual Growth Rate (CAGR) of 7.6% indicating a positive trajectory. The real estate market is expected to advance to $520.984billion by 2027 at a CAGR of 7.0%.

As of 2023, prices of real estate have become immense all over the world especially in regions with the best real estate market.

American average house prices were $436,800 as of the 1st quarter of 2023 depicting a 32% hike from 2020, when the moderate price was $329,000. This also indicates a development in the US real estate market.

Asia boasts of very affordable real estate in comparison to other global markets and it is expected to reach $282.90trillion in 2023 as a result of soaring demand. The Asian real estate market is projected to show an annual growth rate of 2.99% resulting in a market value of $327.80trillion by 2028. In global comparison, most real estate value will be generated in China in 2023.

European real estate market value on the other hand is likely to decline and prices are expected to fall by 10%-7% in 2023 making it a perfect market for buyers. Germany, Spain, Portugal, France and Italy are on top of the market as they have been able to maintain their value so far. In contrast to 2023, the previous year experienced an increase in real estate market prices.

According to multiple sources, real estate value has a great tendency to maintain and progress its direction and it isn’t expected to decline anytime soon. This is a result of the adrenaline rush in real estate purchase and demand  after the covid-19 pandemic. The covid-19 pandemic affected the global economy including the real estate market due to the global lockdown which limited real estate transactions worldwide. Moreover, as soon as the crisis eased, the suppressed demands were eased and the market value of real estate impressively returned to the way it was before the pandemic owing to lofty demand of real estate, thus resulting in eminent prices of real estate. This is an advantage to sellers, it however is an issue to buyers because of high interest rates and inflated home values.

Apparently, the current state of the real estate market is commendable since the beginning of the year as it returned to its pre-Covid state even though it was distorted by the covid-19 pandemic crisis. Hopefully, its resilience has predicted a steady growth till the end of the year into the next. This means that the market is currently doing well due to the fact that the market demand for real estate is hoisted. This is a good time for sellers in the real estate market as they’ll tend to get more profit, however it poses a threat to buyers as the land properties may be expensive for them to afford.

Therefore, yes! There is a bubble in real estate also, it is highly possible to extend into the following year and buying a land property is ideal at the moment, although some experts predicted that real estate value is likely to decline. On the contrary, the chances that real estate prices will decline are slim and buying real estate will be a good choice as the prices will continue to expand in response to the rise in demand and limited supply. Purchasing real estate now at a lesser price is better than purchasing it later at a higher price.