Seven factors that can influence property prices

Highlights

• It can be challenging to determine the value of a property as several factors affect how a property is valued.
• It is possible for a very expensive property to lose value due to poor market conditions or a bad economic scenario.
• A property’s location, size, age and condition, paperwork and overall economic conditions can also alter its valuation.

Investing in a property can be a challenging task, especially when someone is a beginner in the field. However, there are certain aspects that can help determine the value of a property in a better way. These factors may not play a big role individually, but their combined impact on buyers’ decision-making can be huge.

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From something as crucial as the location of a property to something seemingly trivial, like the economic conditions – these are all important aspects that decide the value of a property. Many economic factors which may seem ordinary at first can be significant in impacting how a property is valued.

Thus, it is crucial to be mindful of not just the physical attributes of a property but also the surrounding economic and political environment. On that note, let us zero in on seven aspects that can impact the value of a property.

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1.    Location

It goes without saying that the location of a property is of utmost importance when determining its value. A good location can significantly increase the value of a property, while a bad location can make even a mansion seem unappealing. Some might see value in the proximity of the house to important spots such as local schools, shopping malls or entertainment centres. While for many others, a scenic view from the house can be a bonus value addition.

2.    Home size

The size of a property is perhaps one of the biggest factors influencing its value. The market value of a property is highly dependent on its size and usable space. The price per square footage can have different implications for different properties. For instance, AU$100 paid per square foot may seem like a sweet deal in the case of some properties, while it can seem highly expensive in other cases.

3.    Age and condition

The next important factor associated with the value of a property is how old and how well-maintained the house is. Certain aspects of a house are highly susceptible to wear and tear, such as plumbing, electrical and even appliances. A well-maintained house signifies the owner’s sharp attention to detail. These small details can together impact the value of a property greatly, especially if the buyer wants to move in directly.

4.    Paperwork

It is also important to keep all the papers related to the property in check. Documents such as sale deeds, title deeds, verifications, clearances, property tax receipts, and build certificates are essential for legal reasons. Without these documents, the property’s value might decline in the market.

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5.    Supply and demand

The market also largely affects how a property is valued, especially since the market valuation also depends on the perceptions of buyers and sellers. When the market is down, or there are not enough sales happening, prices may fall significantly below the usual value. Alternatively, good days in the market can help a property fetch attractive price.

6.    Economic factors

Despite what many might believe, economic factors also play a crucial role in determining the value of a property. Within a state or region, differences in economic factors can greatly influence how a property is valued. Generally, the price of a property is correlated to the economic growth of that particular state/city.

7.    Political factors

Across countries and states, political factors can cause property markets to differ greatly. The rules and regulations to procure a property may be tougher in certain regions, while in many others, they can be more relaxed. This can also affect property prices. Also, if a region’s political setup is stable, then properties are expected to be better priced there compared to other regions.