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Report on Impacts of Market Efficient Theory

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Added on  2020-02-03

Report on Impacts of Market Efficient Theory

   Added on 2020-02-03

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Property Market Economicanalysis
Report on Impacts of Market Efficient Theory_1
Table of ContentsINTRODUCTION...........................................................................................................................11...................................................................................................................................................12...................................................................................................................................................2CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................7
Report on Impacts of Market Efficient Theory_2
INTRODUCTIONReal estate market is lucrative and good return yielding market. There are manyfactors which can influence the demand and supply of investment. Present report will focus onimpacts of Market efficient theory on property market and it will analysis the whether this theoryapplies in real estate or not. 1Market is the place where firms trade its commodities to gain high profit. Propertymarket is the place in which people trade real estate properties, offered prices of these holdingsreflect supply and demand (Diewert and et.al, 2015). Market efficient theory or hypotheses(EMH) is the concept which defines that all informations are available for all participants andthey can make their choice by using these detail substances. EMH theory works on assumptionsand rational, it is assumed that whenever supply increases then it affects the over all value of theholding. This theoretical concept applies in the real estate market in some cases. Real worldsituation is differed from the book values and informations. Many investors analyse theproperty's values and assume that it will increase in near future. Forecasting and valuationtechniques assist them in taking appropriate decisions. Real estates booms are very common inthe country, prices can get changed any time. US has suffered from housing bubble in 2004, themain reason was of bursting that many of the banks have given housing loans to consumers byassuming that properties values would get higher (Hoshino and Nakanishi, 2016). It was theperception that continuously prices are increasing so it will remain same in future as well. Butsuddenly stock market got dropped worldwide and prices of the properties decreased. U.S facedthe biggest financial crises issue in this year. So these informations will be as same as personassume, it is not possible. Many factors may affect the value which can fluctuate the demand andsupply immediately. So there are no perfect informations are present which can define that pricesof properties will get down or increased. As banks and financial institution got failed inassumption then common investor or property dealer can not determine that what will be futureprice of real estate. EHS assists economists in explaining this cycle but it is difficult to predict. Perfect competition does not exist in the market. Apart from demand and supple there aremany factors which influenced the price of the real estate (Morano, Tajani and Locurcio, 2015).1
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