Top 4 Things That Determine a House’s Value
Buying property is so great, because its value, regardless the possible fluctuations, is relatively stable, and rarely lost. Yet, obtaining a place to call home is one thing, and purchasing a highly valued property to serve as your primary income is another.
In both cases though, you need to ascertain the exact value of your candidate property and its potential shortly. The value of a property is not a vague philosophical notion but rather a magnitude affecting real life interactions. For the sake of simplicity, let’s boil down this figure to four fundamental components. These are:
- Location, amenities, and tourism
Most of the online property value estimators will first require the exact address of the house to provide a value of property estimation. This is not just a mere coincidence. The location has the amplest impact on the value of the land on which the house stands and, hence, it is closely related to its final value. As a rule of thumb, the closer the home to a city centre is, the greater its land value component will be. This principle is used by governments to set zones of same property values and define base tax values as well as from municipalities to calculate the corresponding municipal taxes. Land values, in turn, fuse together many other economic and social factors. For example, the more amenities in the area, the merrier and, of course, the more expensive the land will be. Does the area draw seasonal or constant tourism? Is it developed, having transportation networks, points of interest, etc.? Or, does it offer natural beauty or uninterrupted view? Then the value of the land will rise. The final land value will be a direct product of the building block area to its base, per square meter, value.
- Building regulations
Building regulations can also play a part in the real estate market. Parameters such the built-surface ratio, building restrictions concerning the total height, maximum number of stories, the density of occupation and many other, may differ from place to place and affect both qualitative and quantitative aspects of building possibilities and choices. If the government decides for some reason to change the building regulations, this will have a profound impact on the property values.
- Age, condition, and luxury
Apart from the factors that deal with the land and the building possibilities allowed by the building regulations, the house itself represents an important component of the definition of its value. The age of the building, the condition, and appearance of the structure, the functionality and the maintenance applied have their weight on the formula that estimates property values. Needless to mention that building quality regarding luxury, technology integration features and security are associated with the property value too.
- Economic trends, offer-demand, and property competitiveness
Local or National economic growth is another important player in the real estate market. The twists and turns of an economy can reflect directly on the values of properties. People in difficult economic periods tend to liquidate assets, including houses. This may change the status quo in property offer and demand balance, a fact that can be exacerbated by the property competitiveness. When this happens, it is certain that property values will settle in a different intrinsic correlation. The macroeconomic trends require land and property values to be ever increasing in the long term. However, small micro economic fluctuations can turn the tables.
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