The Top Factors That Drive the Real Estate Market

What really influences the real estate market? What actually is it that causes house prices to soar in a particular period and then plummet the next? What leads to the construction of new housing projects? What type of people buy older homes and what kind buy modern ones. What kind of properties sell for the highest value and in which areas? What precisely is it that makes a particular kind of home popular? 

We could go on with these questions ad infinitum; the property market is dynamic and there is a nearly unlimited number of determining factors which influence just how the property market works on a daily basis and how it evolves into the future. However, these are not what we would typically see as the big “driving factors” of the property market. These driving factors are in fact general categories which influence how the property market works and evolves – anywhere in the world. There are widely considered to be four of these major driving factors – demographics, the economy, interest rates, and government policies/subsidies. 

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Learning how these factors work could be considered something of a property developer 101, but this is also extremely useful knowledge for anyone looking to either buy or sell a house. A good knowledge of the major driving factors which influence the property market across different timescales could prove invaluable when it comes to making those all-important decisions of when to sell your home or when to go looking for the perfect property. 

Of course, there is no substitute for professional advice when it comes to either buying or selling. City Home Collective, a real estate brokerage specializing in modern and luxury homes in Salt Lake City certainly work with deference to these main property market driving factors. Unlike you, however, they can bring to bear years of expertise and access to market data as well. 

The Key Factors That Drive the Property Market

However, there is certainly a lot be said for wising up yourself becoming a more clued-in homeowner. Here follows then an explanation of just how each of these factors drive the property market. 


Demographics is all about what kind of people are active in the property market. What age are they? How do they break down by gender? Are they single or part of a family? As you might expect, this has a massive influence on the property market. For example, many young families means that family homes sell well; many people of retirement age would see condos and single person properties become more popular. 

Interest Rates 

Interest rates have a marked and consistent effect on the property market, simply because they affect a buyer’s ability to the purchase a property with a mortgage. At low interest rates, mortgages become cheaper and thus demand for homes increases. 

The Economy 

Of course, the property market is part of the economy, so naturally the overall health of system will have a huge influence on everything from house prices to mortgage rates and demand. Generally speaking, if the economy does badly, so does real estate. 

Government Policies and Subsidies 

These refer to active government intervention within the property market, something that is usually done in order to aid it through difficult times and to boost demand. Such policies and subsidies include things like tax credits and deductions. 

Within each of these categories there is a great many factors that ultimately affect the property market. It would be impossible to include them all but knowing the general way things work certainly won’t hurt your chances of buying or selling with success.