Here are some of the factors that affect property value and prices relatively:

1. Location
The location of your property is one of the most important factors that affect real estate values. Is it close to restaurants, schools, shops, public transportation, and other neighborhood amenities? Is it in a sought-after tourist destination? Is it close to the city center? The more popular and accessible an investment location is, the more valuable the property will be.

2. Home Size and Usable Space
The market value of a real estate property is usually mentioned in terms of price per square foot – the total sales price divided by the property’s square footage.

3. Age and Condition
Age is another factor that plays a major role in determining property value. Usually, the newer the property, the more buyers would be willing to pay for it since it does not require any major real estate renovations or repairs. Besides age, property buyers also consider the condition of the structure. People would rather buy a 15-year old house that is well maintained than a newer one that needs major renovation.

4. Upgrades and Updates
Upgrades, updates, and home renovations can significantly increase the value of your property, especially older properties that might have outdated features. Kitchen and bathroom renovations are some of the improvements that could have the biggest effect on the home’s value. You could also consider increasing the number of bedrooms. The ‘curb appeal’ or outer appearance is another major factor that affects the value of a property.

5. Supply and Demand
The push and pull of supply and demand has a major influence on the value of property. If there is a high demand but fixed supply, the price of properties will rise as more people attempt to buy. Supply can be increased by splitting large existing structures into several smaller units or building entirely new properties. When supply exceeds demand, prices will then start going down.

6. Planning/Building Regulations
Constructing a property today requires building regulations (which include the technical aspects of the construction process) and planning permission (which includes the design, shape, and size of the property). Failure to adhere to these regulations could result in a property being demolished. The amount of planning permission and building regulations required can, therefore, have an impact on the value of the property.

7. Interest Rates
The level of interest rates is one of the major factors that affect property value. If the Reserve Bank decides to increase the interest on loans, lenders will follow suit. This will mean that borrowers will have to pay a higher monthly mortgage repayment. Expensive mortgages mean that properties will be sold at a higher price. On the other hand, a reduction in interest rates means that property will be more affordable.

8. Renovation Potential
Most real estate investors and homebuyers are interested in the renovation potential of a property. This could be the potential to increase the floor space, add an extra storey or extra bedroom, add an outdoor patio or add a pool. If there is an allowance for a buyer to personalize or improve a property, then the value of the property will be higher.

9. Economic Factors
The economic conditions of an area will have an effect on people’s ability to sell or buy an investment property. When the economy is booming, there will be more jobs and people will earn more money. As the buying power of people increases, they are more likely to invest in a new home or second home. The increase in demand will eventually result in higher property prices. On the other hand, if unemployment increases and wages drop, less people will be able to afford a home. Subsequently, the prices of property will also drop.

When you know the factors that affect property value you will certainly know when how and with whom to engage in your property investment, invest wisely with professionals who understand the pros and cons of construction.
These professionals are no other than Derkonig constructions, and remember we keep a very high standard of integrity.

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