As promised from the SWOT Analysis, a deeper analysis of the real estate industry of Bury St Edmunds has been delivered showing Political, Economical, Social, Technological, Legal & Environmental factors.
The government and political situation are looking towards stimulating growth within the property market and, as such, is considering ways of making it easier for developers to establish new property, both residential and commercial. There is evidence of political movements towards ensuring that the lower end of the market is revitalised to encourage first-time buyers. This will have an impact on property investors focusing on rental opportunities, as the easier, it becomes to purchase, the less likely they will be to obtain rental income. There are also political efforts being made to encourage new businesses and this can be seen to be a positive option for commercial property investors, as new businesses will be more inclined to rent the property and this will be more cost-effective, initially, and will allow the opportunity to grow rapidly if they so choose.
The economic availability of mortgages and the reduction in the ability of individuals to borrow money, to purchase property, either residential or commercial will have a direct bearing on the property investment market. Property investors will have a much more willing customer base, as they have been unable to obtain enough finance to purchase their property and are therefore looking towards rental property as an alternative. The more difficult economic times have resulted in many residential and commercial owners losing their premises, as a result of their inability to pay their mortgages and this also offers the opportunity for property investors who have sufficient cash reserves to purchase property at below market.
Social changes and, more specifically, changes within the employment market also tend to encourage individuals to go into businesses and become self-employed, which ultimately provides an opportunity for the commercial property investors who can purchase premises that may be suitable for the new small start businesses. There is also a changing demographic trend for more single-parent families that are smaller and the increase in independent living within the older generation, thus placing a greater demand on rental premises that are smaller and will reflect the changing demographic.
Technological drivers provide both opportunities and progress within the property investment market. Whilst this allows property investors to have much greater access to potential customers, it also means that their customers have much greater access to the competition. Therefore, there is a need for organisations offering property investment services, such as rental property, to utilise technology to capture the broadest possible audience. Technology has also shifted how organisations are operating this has resulted in many cases of individuals working from home, or working from shared spaces, thus reducing the demand for traditional commercial premises.
Higher interest rates mean that mortgages become more expensive, and this deters many would-be purchasers from buying more expensive property. Economic growth is closely related to consumer spending levels. Buoyant house values in many countries are believed to encourage consumer spending as people are less concerned about increasing their borrowing or using their credit cards when sitting on a major asset. Government, which largely controls the planning processes in most societies, is usually concerned to ensure that house builders provide ample low-cost housing in addition to larger, more lavish properties (on which the profit margins for builders are usually higher).
Environmental groups are concerned about the detrimental impact of housing development in the countryside. There are government-backed grant incentives, particularly in many European countries, to use brown-field sites rather than destroy the open countryside, although such sites are often in run-down, less desirable city areas.
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