There is a lot of talk about a recession that is approaching in the near future, however, the majority of the people who are saying a recession is approaching, are influenced by the media of the U.S.A. Countries go in and out of recessions all the time. This does not mean that the world is ending. The small island of Curacao was barely affected by the Great U.S.A Recession in 2008 and the 20% decline of the European currency. This shows that the international real estate market and international currencies do not affect Curacao directly. Wondering what affects Curacao? Lets us take a look at the market that affects Curacao.
Economists measure the price level of products with a price index. A price index is a number whose movement reflects the changes in the average level of prices. If a price index rises 10%, it means the average level of the price of certain products has risen by 10%.
Commodity markets are the key indicators of inflation. And changes in the average price (Price Index) are a good indicator of what we are about to face. Why does it matter for Curacao? Commodities are The fact that Curacao’s trade balance is at $-1,242,812,000 leaves the country vulnerable to the prices of international markets. The Changes in the global commodity price index can have drastic changes to the cost of living in Curacao. For example, when international oil & gas prices rise as a result of the war in Ukraine, the gas prices of Curacao also rise because Curacao does not produce oil & gas locally.
Commodities like fuel, iron and steel, wood, and other metals are extensively used in the real estate sector. Therefore, if the prices of commodities rise, an immediate effect is seen in the prices of real estate. The graph shows that once the commodity index of fuel and metals reaches higher than $120 the commodity prices will fall. The metal index is already falling and it is only a matter of time for the fuel index to follow.
There are many reasons to buy a house during a recession. For one, prices are typically lower during a recession than during prosperous times. When commodity prices fall, so do the house prices. At DeMakelaar Curacao we are already experiencing house prices drop. This makes buying a house during a recession a more affordable option for many people. Additionally, interest rates are usually lower during a recession, making monthly mortgage payments more manageable.
Another reason to buy a house during a recession is that it is a good investment. Although the value of a house may drop during a recession, it always rebounds! When the economy recovers, the value of your house is likely to increase, providing you with a nice return on investment.
Of course, there are also risks associated with buying a house during a recession. For example, you may struggle to sell the house if you need to move before the economy rebounds. Additionally, you may have difficulty qualifying for a mortgage if your income has taken a hit during the recession.
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