Why Real Estate Prices See an Increase in Prices

It is visible that location determines a lot in the real estate industry. It is no doubt that a crises often comes with a fall in the market which also affects the real estate market but in all of this, it is visible that a major factor that land location affects the prices of a the home you buy.

In Nigeria, Lagos is regarded as the business hub of the country with over 20 million people, 80% of the wealthy people in the country live in this place and it should be expected that everywhere in this state should be as clean as possible but i can tell you there are some place in this state where living state is very bad and at such, the prices of home there are very low. There in Lagos also lives the Billionaires and Millionaires in dollars who have their homes vey Lit and expensive. Like the billion dollar question goes, what causes the price of homes and land to spike in one region over the other?

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Causing of Spike in Real-Estate

Demand and Supply

This has never been discarded before when it comes to economics and finance. The demand for a particular product determines the price of such product and this is the same for land and homes as well. When a land is still bushy and people come to buy, it is very cheap because a lot of people do not have interest in it but as time goes on and it gradually see civilization and people start to occupy the region, the price starts to increase.

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Economic Activities

The price of residential regions are normally (except in few cases) cheaper than houses in commercial regions. Buildings in commercial regions starting from offices, malls, shops, stores, warehouses and homes increases because it is a hub to generate money. It is believed that as the business performs its daily activities, it will make up the cost of getting its property.

Social Class

In every part of the world, there is always a place for the La crème de la Crème and when this place want to spike a spike in price, it is often initiated by one person. After building and adding all the luxurious things into the building, the real estate manager always throws a question to the first buyer "How much do you think this is worth?" if the price is lesser than the price expected, the real estate manager then gives the real price, but when it is higher, the real estate manager just takes the price a little higher which then sets a landmark for anyone willing to build or purchase there.

Net income of people living around the region

This is another factor used in determining the value of a building. When the average salary is $100,000 monthly, then expect rent to be at 35% - 50% of the income monthly. This is another way the value of properties increase.

Properties built of the same design and quality can always have different prices when being sold, and this is as a result of location.