Population shifts
A location with attractive business, employment, tourism and retirement opportunities will attract immigrants from outside the country as well as emigrants from other provinces. The increased demand will increase prices. Conversely, if there is net migration out of the area due to closure or potential closure of industry, environmental problems or other factors, it will have the opposite effect on real estate prices, and they will go down.
Vacancy levels
If there are high vacancy levels, this could reduce investor confidence due to the potential risk, and real estate sales could go down. On the other hand, if there are low vacancy levels, this could stimulate investor activity as well as first-time buyers. Renters who can’t find a place to rent may borrow from relatives or find other creative ways to enable them to purchase a home.
Location and image
Highly desirable locations will generally go up in price more quickly and consistently. The public perception of a certain type of residential builder or property will affect demand, and therefore price. Some areas or types of properties are “hot” and some are not at any given time.
Availability of land
Where there is a natural shortage of land, municipal zoning restrictions, limits on development or provincial land-use laws that restrict the utilization of existing land for housing purposes, this will generally cause prices to increase. Again, it relates back to the principle of supply and demand.
Political factors
The policy of a provincial or municipal government in terms of supporting real estate development will naturally have a positive or negative effect on supply and demand, and therefore on prices.
Seasonal factors
Certain times of year are traditionally slow months for residential real estate sales, hence prices decline. The same seasonal factor has an impact on recreational property. There are ideal seasons for purchase and sale.
Other external factors that can affect the real estate cycle, and therefore prices, include the general business economic cycle, local business cycle and community cycle. As you can see, being aware of all these dynamics is critical to prudent decision-making when buying or selling real estate.
