Here are some things to consider when evaluating your potential success in the field. The economy It seems like every real estate downturn gets blamed on the economy. There is a reason for this. The state of the economy plays a huge part in the amount of money that is available for people to buy homes.
Trends are what allow traders and investors to capture profits. There are four major factors that cause both long-term trends and short-term fluctuations. These factors are government, international transactions, speculation and expectation, and supply and demand. Here are the four major factors: By increasing and decreasing interest ratesthe U.
Federal Reserve can effectively slow or attempt to speed up growth within the country. This is called monetary policy. By altering interest rates and the amount of dollars available on the open marketgovernments can change how much investment flows into and out of the country.
Learn more in our Federal Reserve Tutorial. Countries that predominantly exportwhether physical goods or services, are continually bringing money into their countries.
This money can then be reinvested and can stimulate the financial markets within those countries. Speculation and Expectation Speculation and expectation are integral parts of the financial system.
Expectation of future action is dependent on current acts and shapes both current and future trends. Sentiment indicators are commonly used to gauge how certain groups are feeling about the current economy.
Analysis of these indicators as well as other forms of fundamental and technical analysis can create a bias or expectation of future price rates and trend direction. Supply and Demand Supply and demand for products, services, currencies and other investments creates a push-pull dynamic in prices.
Prices and rates change as supply or demand changes. If something is in demand and supply begins to shrink, prices will rise. If supply increases beyond current demand, prices will fall.
If supply is relatively stable, prices can fluctuate higher and lower as demand increases or decreases. While all of these major factors are categorically different, they are closely linked to one another.
Government news releases, such as proposed changes in spending or tax policy, as well as Federal Reserve decisions to change or maintain interest rates can also have a dramatic effect on long term trends.
The lowering of interest rates and taxes can encourage spending and economic growth. This in turn has a tendency to push market prices higher. In the short termthese news releases can cause large price swings as traders and investors buy and sell in response to the information.
Increased action around these announcements can create short-term trends, while longer term trends may develop as investors fully grasp and absorb what the impact of the information means for the markets. A high demand for a currency means that currency will rise relative to other currencies.
The Participant Effect The analysis and resultant positions taken by traders and investors based on the information they receive about government policy and international transactions create speculation as to where prices will move.
When enough people agree on one direction, the market enters into a trend that could sustain itself for many years. Trends are also perpetuated by market participants who were wrong in their analysis. As more investors climb aboard to profit from a trend, the market becomes saturated and the trend reversesat least temporarily.
In some markets, such as commoditiessupply is determined by a physical product. Supply and demand for oil is constantly changing, adjusting the price a market participant is willing to pay for oil today and in the future.
As supply dwindles or demand increases, a long-term rise in oil prices can occur as market participants outbid one another to attain a seemingly finite supply of the commodity. Stocks fluctuate on a short and long-term scale, creating trends. The threat of supply drying up at current prices forces buyers to buy at higher and higher prices, creating large price increases.The Uk Housing Market Words | 13 Pages.
INTRODUCTION In this essay, I will examine the factors that determine the price of houses in UK housing market.
“The real estate market looks a lot different than it did even three years ago,” says Rachel Drew, a research analyst for the Joint Center for Housing Studies at Harvard University. Supply of House in the UK and London 10 Price of the House 10 Availability and Price of land 11 Future Price Expectation 12 Government Policies affecting Housing Market 14 show more content As per above diagram, per month rent of average houses in the UK has raised.
Factors affecting Demand of a House in the Market: Price of the House: price of the house is the main factor in identifying the demand for a house in the market. The lesser the price, the more customer demand will be for a particular product. In the UK, it is argued there is a significant shortage of housing is this explains why house prices have risen much faster than inflation and earnings.
However, in the US, the supply of housing increased in the period upto and therefore, the excess supply and falling demand led to a big fall in demand.
There are a number of factors affecting product pricing in the UK. The first factor is the structure of the market. Oligopoly is a type of market that can be seen in the UK, for example, electricity and gas supply industry in Britain.