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Factors that affect house prices
9th May 2012

People always consider current property value whether they are selling or purchasing properties. There are several factors that can shift property prices on both ends i.e. high and low prices. Major factors that determine the value of any kind of real estate include general condition, location, and status of the real estate market. It has been observed that low interest and unemployment rates make the economy stable and property prices tend to be high. Since property prices do not remain the same forever that’s why it is good to assess property prices on an annual basis. Similarly, property prices drop when the economy declines and interest rates and unemployment are rising. In other words, property prices are inversely proportional to interest rate and unemployment rate. As we know that the property business in Dubai has become one of the fastest growing businesses. Real estate Dubai not only drags the attention of investors from local markets plus international investors across the globe to make huge investments in the Dubai property business. Real estate Dubai has a strong potential to return good profits to investors. Whether you are the owner of Dubai property willing to sell your asset or you are a local or foreigner buyer who wants to purchase a Dubai property, you can make good deals.

Factors that can shift property prices

We are considering the Dubai property market as an example to study these factors that can shift property prices because the real estate market in Dubai is a very huge industry. You can find numerous investors from the local market as well as international markets making huge property deals. If you typically consider residential or commercial properties you will find that most of the buyers consider its neighborhood because it plays a great role to determine the price of your asset. Although it is true that well maintained estate and neighborhood add some worth to the property but there are other countless factors outside the control range of property owners that can shift property prices in any direction. The following are some most remarkable factors that can shift property prices.

  • Economic Growth
  • Unemployment
  • Consumer Confidence
  • Supply and Demand
  • Location
  • Buyers Perception
  • Building Cost
  • Availability of Funds

Economic growth

If you are considering a real estate market of a country with a healthy economy, you will find that property prices in all sectors will be high. This is due to the reason that in a strong economy people are making more money and they are stable financially. They can afford to buy properties. This directly affects on property demand and raise property prices. While in a down economy surplus is get developed in the market that reduces property prices.


Unemployment creates uncertainty in the consumer’s mind about their future. They show less interest to buy properties that reduce demand and finally shift price towards the descending side. In contrast to that if more people are employed more and more people become interested to buy properties. As a result property demand increases while prices get high.

Consumer Confidence

Consumer confidence is also critical to determine property prices. In other words, financially strong consumers are more likely to purchase properties. This factor is based on economic growth and availability of employment. Moreover, a healthy economy also drags investors to make huge investments in the real estate business.

Supply and demand

Like other business industries, supply and demand play an important role in price determination. If more buyers show their interest in property purchase, the prices will rise. Factors that are responsible to produce assets are population, availability of land and availability of construction labor.


Location is the major factor for property price shifts. If asset location allows easy access to amenities like shopping centers, healthcare facilities, and entertainment places then the price will be shifted towards the high end. Areas with high crime rate and unexciting neighborhoods don’t attract buyers and investors to do estate business. A bad location adversely affects property prices to fell down. If you take an example of real estate Dubai, you will find that Dubai properties remain in high demand due to high economic growth and a very low crime rate.

Buyers perception

Perception is basically the opinion of buyers about any estate. Although it doesn’t has real existence but it immensely impacts real estate market. Buyers or investors can develop a thought in their mind after observing the market. If they find neighborhood properties for sale with reduced prices they may think that the estate market is not good in this specific area and it is not a good time to buy property in that area. Foreclosure properties have a negative effect on property prices of individual properties.

Building cost

Building cost is a real factor that directly increases or decreases property prices. If prices of building material and supplies tend to be high builders add extra cost to the final property price. This results in high property prices.

Availability of funds

Almost every property buyer needs to borrow funds from lenders to purchase an asset. If banks design flexible policies to give loan then more buyers will be able to make a deal to purchase a property. In contrast, if banks become stricter to give loans, then few buyers will be able to make deals to purchase a house or commercial office building. If a property remains for a long time in the same market, owners have to reduce the price to attract buyers. If more people get loans and funds to purchase property, more buyers become unable to afford a home. This creates a decrease in supply and allows owners to increase property prices to earn good profits.


These are some major factors that can shift property prices in the real estate market of any city across the globe. If you are going to make real estate investment on an international level, studying and knowing these factors of that specific city will help you to choose the best place to make real estate investment.

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