Published on 11 August 2015
There are a number of influencing factors on property value. The impact of the influencing factor will change depending on the severity of other factors.
Value is created by the interaction of supply and demand. Economic market principles determine what value any commodity will have at a particular time. The supply of property is relatively fixed at any one time. In order to increase supply, more properties must be built or large existing properties split into several smaller units. Demand, however, can change relatively quickly thus influencing property values. If demand increases and supply is fixed, the price of the commodity will rise as more people try to buy. Increases in demand for property stimulate supply (the builders of property) to create more, which takes time meaning prices will rise in the short term. Demand may also be increased by changes in the economic situation of buyers: if they have more income, demand is likely to be stimulated.
Location is generally accepted as the single biggest factor influencing market appraisal. Similar types of properties in different areas command significantly different prices. Buyers may pay more for a similar property in a more desirable area. It may be that accessibility to transport links or good schools affects desirability. Aspect may include a view or a south-facing garden.
Type of house (detached, terraced, semi-detached etc), style (e.g. does the house have a ‘wow’ factor or particular kerb appeal) and age, such as an older property with historical connections or a newer property with up-to-date fittings, will also affect value.
Linked to size of property is also area of land occupied which has an impact on value. Size may be similar such as with a row of late nineteenth century terraced houses or may vary greatly so knowing size is useful in the appraisal process. When measuring property, the guidelines in the Code of Measuring Practice should be followed.
Building a property today requires both planning permission (which covers size, shape, design and siting aspects of the property) and building regulations (which covers the technical aspects relating to the construction process) approval. Without these, a property may have to be demolished. Occupancy restrictions are becoming increasingly common to ensure affordable housing is available in certain areas e.g. the debate over the provision of affordable housing.
Other influencing factors include:
Categories: Residential Sales Property Appraisal