Management Theory and Studies for Rural Business and Infrastructure Development, Volume 15

Systematic approach to real estate market functioning

Ieva Kvedaravičienė

Abstract

The purpose of the article is to analyse real estate market applying systematic approach and
prove the impact of surrounding environment to real estate market development. The real estate
market and its functioning in the changing environment are being analysed applying theoretical
knowledge and systematic approach.
Real estate market traditionally is being analysed by certain overview of the major market
factors – supply and demand. “Residential market finances”, “market mechanism” or other terms
are more or less used in the theoretical or practical discussion; however, real estate market‘s functioning
is not isolate in a certain area. In general, real estate market can be described as organizational
possibilities and means, which allow acquisition, exploitation, renovation, or sale of the property
according to certain rules, which mostly are defined by economical system.
The property market, as any other market, is surrounded or is a part of other, larger macro
market, or system, and it is worth to analyse any market having in mind a potential impact of surrounding
environments. The fact that real estate can not be moved into other geographical location,
tells that property market is sensitive to surrounding, macro markets in particular. These aspects
encourage going deeper and seeing major impacts of the surrounding environment – economic,
political, and cultural, etc.
In general, it is advisable to analyse real estate market applying systematic approach, as it
has all systematic features: we can easy identify market participants (elements), determine interrelations
among the elements, analyse functions of the system and the environment it is functioning
in.
Every functioning market has its own goals. The major goal of residential market is allocation
of goods (Jaffe, 1989). The market is functioning effectively, when its goal – to allocate the
goods – is achieved. Interrelations and actions of the market participants directly depend on surrounding,
or larger systems’ impact. Changing environment – improving or worsening financing
terms, growing or decreasing wages and possibilities to acquire the property has a huge impact on
demand and supply in the market. Being a part of a larger system, real estate market is influenced
by economic, political structures. Certain events in one of the structures (inflation growth, banks’
financial policies, and real estate market crisis in other region, etc.) set some norms of internal participants’
behaviour. Close monitoring of surrounding systems and internal elements behaviour
may allow softening possible outcomes or at least help to be better prepared for future changes in
the market.

Keyword(s): functioning mechanism, macrosystem, market participants, real estate, real estate market and its functioning


Full Text: PDF

Refbacks

  • There are currently no refbacks.
1076 views

Management Theory and Studies for Rural Business and Infrastructure Development eISSN 2345-0355

This journal is published under the terms of the Creative Commons Attribution-Noncommercial 3.0 Unported License. Responsible editor: Dr Audrius Gargasas.