Factors Affecting Property Value
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.
Supply and Demand
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, Accessibility and Aspect
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.
Property Type, Style and Age
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.
Property Size
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.
Planning / Building Regulations
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:
- Condition of repair inside and outside - some disrepair has more impact on value than others e.g. a broken gutter can be easily repaired but cracked brickwork is more costly
- Method of construction - e.g. brick or stone walls with thermal block inner walls, pitched roofs in tiles or slates or a prefabricated property popular at the end of the Second World War
- Ownership status – owning the freehold or leasehold is an important factor in value
- Environmental factors – susceptibility to flooding from severe storms as in early 2014 which can be checked with the Environment Agency
- Energy performance and sustainability - in future, the energy performance of a property may become an influencing factor on value and sustainability issues may impact on property value.
