Rises and falls in real estate prices largely depend on various factors, including economic stability, supply and demand, legislative changes, global events, and more. The real estate market is subject to cyclical patterns and can experience both price growth and decline at different periods.
Let's review the events of the past 50 years, the critical moments when real estate crises occurred in different countries. Some of these crises were caused by multiple factors:
The 2008 US Crisis (Subprime Mortgage Crisis):
One of the most memorable crises was the collapse of the housing mortgage market in the US. Banks provided mortgage loans to clients with low credit ratings (subprime mortgages) and increased loan volumes. This led to a housing market bubble that eventually burst, causing a crisis. Many homeowners couldn't repay their loans, resulting in mass defaults and a decline in real estate prices. This crisis also had a global economic impact.
The Late 1980s Crisis in Japan:
Japan also experienced a real estate crisis linked to the bubble in real estate and stock markets. Real estate prices in Japan soared rapidly and then collapsed in the early 1990s, leading to a prolonged economic stagnation in Japan for decades.
European Crisis of the 2010s:
Some European countries, like Greece, Spain, and Portugal, faced a real estate crisis due to overvaluation of property prices and a debt crisis. This resulted in a collapse of the real estate market, banking issues, and high unemployment in these countries.
It's difficult to say whose real estate investments led to this collapse.
Real estate investment is often attractive to wealthy individuals, and their actions can influence prices. Suppose a well-known businessman arrived on the island a few years ago and made substantial real estate investments. Now, with external pressures, the question arises: how long will he hold onto the property?
When investment demand peaks, it can temporarily raise housing prices. However, if demand starts to fall due to various factors like a pandemic, economic changes, or external circumstances, this could lead to an oversupply and a decline in real estate prices.
The situation with relocations from the Eurasian region, seeking asylum due to conflicts or instability, caused a second wave of price surges, nearly doubling the cost of housing.
This may temporarily affect the real estate market, increasing demand and potentially further inflating prices compared to the previous surge. However, this depends on the overall political and economic situation and could be a temporary phenomenon.
Global events like geopolitical conflicts, economic crises, pandemics, etc., can significantly impact the global real estate market. For example, the COVID-19 pandemic altered buyer preferences and housing demand, thereby affecting prices in certain regions.
Forecasting future changes in the real estate market is a complex task, given the numerous variables involved. Market recovery after a downturn could be a lengthy process, dependent on factors like economic stabilization, legislative changes, external elements, and consumer trust.
To provide accurate forecasts and analysis, a more detailed investigation and access to current data, subject to change over time and situations, are required.
We can only speculate that in the coming years, after the Eurasian region stabilizes, real estate will gradually drop in price, over 2-4 stages. Overall, it might decrease by 30-45% from the peak prices on the graph.
Here are the main factors contributing to the crisis:
Speculative bubbles: Sharp increases in housing prices based on speculation and insufficient fundamental property value.
Weak credit policy: Issuing loans without proper control and assessment of borrowers' creditworthiness, leading to mass defaults.
Economic factors: Economic crises, job losses, deteriorating living conditions resulting in the inability to repay mortgages.
Loss of trust: Crisis of confidence in the real estate market or financial institutions that can accelerate the decline in property prices.
Consequences of real estate crises include declining housing prices, increased defaults, and high unemployment in construction and real estate sectors. These crises can also have long-term effects on the economy and social stability.
