Factors influencing a property’s value

In this guide, we’ll explore the elements that can make or break the value of a property.

Location, location, location

The age-old adage, "location, location, location," remains as relevant as ever.

Desirable locations often feature:

• Proximity to amenities: Easy access to schools, shopping centres, public transport, and medical facilities enhances a property’s appeal.
• Neighbourhood quality: Safe, well-maintained neighbourhoods with a strong sense of community are generally always in demand.
• Economic stability: Areas with a robust job market and economic growth prospects tend to sustain property values better.

Moreover, the property's position within a neighbourhood can affect its value — for instance, a quiet cul-de-sac may be more desirable than a busy road.

Economic indicators

Real estate is influenced by broader economic conditions. As an investor, you should consider:

• Interest rates: Lower interest rates can increase borrowing capacity, driving up property prices.

• Employment rates: Areas with high employment opportunities can attract more residents, boosting demand.
• Economic growth: Regions with strong economic growth are likely to see property values rise.

Supply and demand dynamics?

The basic economic principle of supply and demand is a key driver of property prices. Areas with high demand but limited supply can see property values skyrocket. Conversely, if the market is flooded with properties but there are fewer buyers, values may stall or decline.

Property size and layout

The size of the property, including the land and the building, impacts value. Larger homes with more bedrooms and bathrooms typically command higher prices. However, the layout is also crucial; a well-designed home can often be more valuable than a larger, poorly laid out one.

Age and condition

Newer homes can attract a premium due to modern features and minimal wear and tear. However, older properties can also be valuable, especially if they have historical significance or architectural merit. The condition of the property is also important; well-maintained properties are more valuable than those in disrepair.

Development potential

Properties with development potential, such as the ability to subdivide or renovate, can be more valuable due to their increased income-generating potential. This is particularly attractive to investors looking to maximise their return on investment.

Rental yields

For investment properties, rental income is a key factor. High rental yields can increase a property’s value, as they promise a better return on investment. The potential for consistent rental income can be a powerful draw for investors.

Market trends and demographics

Trends in the housing market can influence property values. For example, an increase in remote working may boost demand for properties with home offices. Demographic shifts, such as an ageing population, can also impact the types of properties in demand.

Planning regulations

Local planning regulations can have a significant impact. Restrictions on building heights, density, or heritage listings can limit development potential, while areas with more relaxed regulations may see increased value due to development opportunities.

Legal and regulatory considerations

Be aware of legal aspects that can influence property value:

• Property taxes: Higher taxes can reduce the net returns on investment.
• Building regulations: Stringent building codes can impact future renovations or developments.

Environmental factors

The natural environment — from views and aspect to the risk of natural disasters — can have a pronounced effect on property values. Waterfront properties typically command a high price, while those in areas prone to flooding or bushfires may be devalued.

Infrastructure projects

Upcoming infrastructure projects can be a boon for property values, especially if they improve access to amenities or employment hubs. However, the construction phase may temporarily dampen values due to noise and disruption.

Aesthetic appeal

The visual appeal of a property can’t be underestimated. A property that looks good, both inside and out, can attract more interest and, consequently, a higher price.

Functional features

Functional features such as parking, storage, and outdoor space can add considerable value. In urban areas, secure parking can be particularly valuable, while in suburban areas, a large garden may be more desirable.

Market sentiment

The overall sentiment in the property market can influence value. Positive sentiment can lead to increased buying activity and higher prices, while negative sentiment can have the opposite effect.

Personal circumstances

Lastly, the personal circumstances of the seller or buyer can influence the sale price. For instance, a seller in urgent need of funds may accept a lower price, affecting the perceived market value.

Looking to buy a high-quality investment property? Auswide Buyer’s Agency can help. To discuss your options, book a free consultation with Ashish Malhotra.