How Does A Property’s Value Increase?
In property investment there’s the common assumption that unless you time the buying and selling of a property right, then the only way to increase its value is by doing significant renovations. While this misconception has some truth to it, there are other avenues to gain returns on your property investment. Below, we have highlighted some key factors that contribute to the increase in a property’s value. We also highlight factors that reduce the risk of its value falling.
Determining Laws of Supply and Demand
Land is a finite resource. For this reason, it appreciates in value over time due to the limited supply. Every year the population rises yet we can only utilize available land. Price increase for flats and apartments also happens frequently due to demand. When they are located in highly desirable areas with excellent transport links, they naturally appeal to a larger renter and investor market. Currently, the UK is in dire need of residential properties to meet ever-increasing housing supply needs. The new housing supply has hit its highest level in a decade in the UK. This means property in prime locations stays vacant for shorter periods.
Property Size And Available Amenities
Quite often, the size of a property dramatically determines its price. The number of bedrooms, common rooms, size of outdoor spaces, and garages can add value. With apartments, you have limited freedom to build an extension or make use of any unused space. There’s rarely such a thing as unused space. This is not necessarily a bad thing, though. At times buyers want a smaller property that is easier to manage. Others may want to downsize. A significant number of buyers interested in apartments are property investors themselves looking for a buy-to-let opportunity.
Aside from apartment interiors, the additional communal areas and amenities can make or break its value. Parking, gardens, gyms, conference facilities or meeting rooms et cetera do add value to the apartment. These amenities also make it a more appealing place to live. As a property investor looking for value, consider spacious interiors and amenities when selecting your investment.
The location of a property is an essential factor. A house can be decorated with the best possible fixtures and fittings on the market. However, this will not compensate for a rough neighbourhood. Most new build developments are built in up and coming areas. They generally have fantastic transportation links as well as efficient commuter routes. This has a measurable impact on the value of the location. So does being close to respected schools. Another slightly more surprising factor that contributes to a property’s value is having a supermarket nearby. Buyers seek out these areas which generally have a high rental market.
Age of the Building
The older the building, the more likely repairs will be needed. Such repairs are considered major expenses. Putting in new windows, repairing a roof, updated plumbing and electrics are expensive jobs. When you purchase a new build such issues are very rare. A contractor warranty is normally available to cover for issues with such structural failings. This applies if you are the first buyer of a newly built home. Some older property may be listed as a historical or architectural heritage. If they are, the investor could encounter red tape when trying to do repairs. Listed buildings sometimes require permission before particular renovations can be performed.
Developments Add Value to Your Property Investment
Current and future developments in the local community impact a property’s value for better or worse. It may be a challenge knowing precisely what is being planned development-wise. To ensure the property investment is as good as it seems, always look into public records. From there you can decipher potential developments planned for the next few years. Regeneration projects are usually good news for property value. In particular, ones that bring with them high volumes of jobs. Recently, Northern Powerhouse cities have undertaken multiple regeneration projects. Which is why most are considered property investment hotspots. Keep an eye out for regeneration zones.
The Local Property Market
One thing that will always impact a property’s value is the property market itself. Beyond the general national property market, the local one has an impact as well. While the general property market is challenging to predict, the local property market is a little easier. A simple search for properties on the market in your area will provide you with a good idea of how much neighbouring properties are selling for. It will also show the quantities of properties in your area up for sale. Some websites will even tell you the number of people that have viewed the properties. The number of other properties for sale in the area can impact the value of your property. As well as the number of buyers looking in that area.
Varied elements impact a property’s value either positively or negatively. It is important to remember some of these factors are not necessarily to do with the property itself. Investors’ decision to buy is largely pegged on their funds and the economy. Experienced property investors don’t just choose a property at random. They do a great deal of research into the potential property investment. ignore the fancy furnishings and stylish walkways. Furthermore, they generally have an idea of how the property market has been progressing.
Knowing how a property’s value increases or decreases help in buying and selling property. When you have a solid understanding you make informed decisions. A property investment opportunity that seemed only average could actually be fantastic when you find out there’s a new redevelopment in the pipeline. will bring hundreds of jobs. Spotting a good property investment is much deeper than just what is seen in the brochure. Marketing materials are created with the intention of selling to you. As in all processes, undertake thorough due diligence before making a commitment.