Whether you want to sell an existing property or buy a new one, you should know its true worth. But what are those elements that impact the property value? From location to infrastructure, many factors decide the price of the property. Knowing these will lower your risk of falling for a real estate scam. Below we have mentioned five crucial factors that can help you predict the right value of a property.
1. Geographical factors
Geographical factors play a crucial role in determining the value of a property. Below are some vital geographical factors that affect a property’s value.
- Location- Properties close to schools, restaurants, and public transportation are worth more than those in isolated or rural areas.
- Natural disasters- Natural calamities such as earthquakes and floods affect the value of a property. Properties prone to natural disasters tend to have lower value than those in stable regions.
- Environmental hazards- Property value get negatively affected by the presence of contaminated groundwater or toxic waste.
2. Economic factors
Economic policies significantly impact the value of a property. For example, if a government implements an economic policy that facilitates investment, it can increase the demand for real estate. Similarly, investors can be discouraged, and demand for real estate can decrease if a government implements a restrictive policy. The following economic factors can help you better understand its effect.
- Interest rates- Interest rates directly impact the value of a property. High-interest rates make a property less affordable for buyers who need a mortgage, whereas low-interest rates make it more affordable for people.
- Employment rates- Properties rates are higher in locations where there are high employment rates than they are in places where there are low employment rates. Property dealers in Punjab can help you find the best property at the best location in Mohali and Chandigarh.
- Overall economy- People are more likely to invest in real estate if they have disposable income, which is only possible in a strong and growing economy. Similarly, people are less likely to invest in a property if they have less or no disposable income, which happens when the economy is weak.
- Inflation- Inflation increases the cost of living, which further increases the cost of housing and increases the property value. Conversely, low and stable inflation decreases the cost of living and the cost of housing, which decreases the property value.
3. Political factors
Nobody wants to invest in a state or nation with unstable politics. Businesses become apprehensive and fearful as a result of instability. On the other side, political stability guarantees the protection and security of both people and enterprises. Along with this, several additional political variables influence property worth.
- Tax Policies- The affordability of land/property gets directly affected by the change in tax policies, such as an increase in property tax, etc.
- Zoning laws- Sometimes, the government decides to rezone, which changes the use of a property which can decrease or increase its value.
- Infrastructure investments- Infrastructure investments such as roads, national highways, and public transportation can improve access to a property. All this increases the value of the property.
- Environmental policies- Government environmental policies such as restrictions for construction near wetlands can decrease the development work (as the amount of land will be reduced), which can lower the property value.
4. Supply and demand
Supply and demand are very fundamental concepts when it comes to investing in a residential property in Mohali. In a scenario when there is a shortage of housing, competition is at an all-time high. As a result, purchasers are willing to pay a higher price for the home, driving up property rates. On the other hand, the oversupply of houses decreases property rates. Also, note that supply and demand get influenced by the economic factors, interest rates, and zone regulations which we have discussed before.
5. Age and condition of the property
Age and condition impact the value of a property in several ways. Older properties require maintenance, which decreases their value. But this is not the case with every old property. Some of them have architectural significance, which increases their value. Similar is the case with the condition of the property; Well-maintained properties are more valuable than those properties that are in bad condition.
The bottom line
An accurate valuation of a property helps you make educated decisions. We have mentioned a few factors that affect the property value, but there are many more factors that you need to know to estimate the accurate price. If you want to know more, keep reading our blogs.