Buying your own house does not only give you a place to live; it also provides you with an opportunity to make money. You can either resell your home or make the rooms available for rent. Not all homes are ideal for the said money making schemes, though. An experienced mortgage broker can help you shop around to get the best property for your goal. Aside from that, you should also consider the housing market situation in the country. Is it a boom, bust and boom, or a gloom?
Boom vs. Bust and Boom vs. Gloom
The International Monetary Fund closely follows the housing markets of over 50 countries and publishes reports about them on a quarterly basis. In its reports, the housing markets are classified based on their recovery from the global financial crisis in 2008 to 2009. The three classifications are boom, bust and boom, and gloom. If the housing market in the country is under gloom, real estate may not be among the most lucrative options for you.
The financial crisis resulted to the notable price decrease in housing options in several countries. Some were able to get back on track after the price drop while some failed. Those that have yet to make a rebound are regarded as gloom economies. As of 2017, Spain, China, Brazil and Russia are still under this category.
Countries whose housing markets recover are under either boom or bust and boom economies. The basic difference between the two is that in boom, there is a rapid turnaround in the housing market following a relatively small drop in housing prices. In contrast, the rebound is somewhat slow after a huge price decrease in the bust and boom economies. The US, UK, New Zealand, Ireland, Germany and Japan are under bust and boom while Canada, Austria, Australia, Switzerland, Sweden and Mexico are some of the 22 countries classified as boom economies.
The Downside to Boom
A boom housing market seems to be the most ideal of the three. However, it does not mean it is free from any risks. Additionally, it does not mean that all buyers and lenders alike are going to benefit greatly.
If the housing prices are high, some might take advantage and further raise the prices. While you may gain a lot from resale or rental, the high prices may leave behind lack of affordable options for those who badly needed a place to stay in the country. In case the price escalation becomes too unbearable, the demand may go down which will result to the lowering of the real estate prices.
The location of the real estate property also helps determine whether or not the boom classification is advantageous. Properties in major cities are often the ones that experience the remarkable price increase. It may spill over in neighboring less populated cities so you might want to consider these instead.
Searching for a real estate property is going to be a tedious and time-consuming activity, especially if you want to gain more than just a house to live. A broker can help streamline the process for you and even assist you in finding which property suits your goals the most. Moreover, you can also seek clarifications regarding the country’s housing market status and ask for advice on when it is best to invest in real estate.