The factors that define the property’s value range from location to amenities to demographics, interest rates and so on. Getting a property valuation done is also an essential part of the home loan application process.
They are used to determine the value of a property that will act as security against your home loan and may need to be carried out when you buy a new property, refinance, or want to access the equity in your home.
While determining the property value, it is important to understand that appreciation or depreciation of the property is the main factor. The reality is that the physical structure actually depreciates over time. It is the land underneath the structure that appreciates in value.
This is a significant distinction, considering that the purchase of a home is the single greatest investment that most retail investors will make in their lifetimes.
Further, the property values shall keep appreciating as the population is increasing, creating increasing needs for housing while the supply of land is limited. No one is produc ing it anymore, demand increases while supply doesn’t go up. Unless any area specific problem arises, the prices are bound to escalate.
The factor that is primary to valuation is location. Any property’s location plays a very decisive role in its value formation. The areas that are more developed tend to have more prices as opposed to the areas that are far from the main city, are under-developed and still growing.
A property be it building, commercial space or house, will fetch more money, even the brokers would quote higher prices of the property that is well located.
Overall infrastructure is equally important, the presence of roads, flyovers, malls, bus terminals, educational institutes, medical centres, retail markets, etc. It is a known fact that connectivity is one of the most important requirements for investors looking towards purchasing land or property.
Value of property, thus, will be justified if the property is located near the main areas of city, landmarks and market places.
The valuation of property is dependent on the specifications of materials used, layout, design, durability and life cy cle of the building. The quality and cost of materials during construction, size, current rates of labour, etc and other physi cal attributes such as roof covering, height of the building, waterproof ing and plinth level, also affect the price of a particular property.
Also, the amenities offered play a decisive role in property valuation.
Gymnasiums, swimming pool, parking lots, libraries, community centres can decide the value of a property. Also, the year of construction is important as between two properties, one new and the other one old, the new one tends to reap better value.
An investor should indulge in a detailed study and research and consider all these factors and then make a decision. There are valuation consultants available, and one can seek their services as well, by paying their consultation charges.
