Introduction - Factors That Influence the Value of a House

It is a truth universally acknowledged that not all houses are worth the same. One could even say two houses that have the same price tag might not be worth the same. This might be because they have features that appeal to different buyers, have different designs, are located in different places or are just built differently. 

As already hinted above there is a lot that goes into the valuation of a given house. I must warn you that property valuation is a complex issue and people study for months and sometimes even years before they become qualified to assess the value of a property. The purpose of this series of articles is to give you a rudimentary idea of what goes into it all. The hope is that when we are done you can be at least informed enough to judge for yourself if a given piece of property is, in your schooled opinion, priced correctly.

To simplify things we are going to limit our discussion to residential properties only. Hopefully, sometime in the future, we will examine commercial property as well. Anyway in this introduction we will look at some of the factors that are taken into consideration when determining the value of a given property. In future articles, we will expand on each given factor and explain in detail how it comes into play.

The exact number of factors that affect the value of a residential property varies depending on whom you ask, but here they are according to me:

• Economic factors - these could be macro economic factors that affect your entire country or some other noteworthy indicators such as those affecting your neighbourhood only.

• Location refers to the country, province, district, town/city or neighbourhood in which the house is found. For example, two similar houses in two different locations are most certainly not worth the same.

• The neighbourhood might seem like it’s related to location but it’s really not. Think of this as the competition. In a new area like Aspindale you have many new houses for sale. It limits what you can charge given the fact that there are other people selling in the same area too. Contrast this with older neighbourhoods where there might not be many to compare to.

• The house itself in terms of size and design. This should be quite an intuitive factor.

• Age and condition - in Zimbabwe, older houses tend to sell for less but this is not always the case.

• Potential - the prospects of a given house or land upon which it stands can elevate or sink the price of a given residential property. An area going through gentrification can result in a boost in the prices of properties in that area.

• The market - a name given to the forces of overall supply and demand as well as other voodoo that goes into it all.

• Availability of credit - how easy or difficult it is to get mortgages can have an effect on property prices.

Over the course of the next eight or so articles we will explore how some of these factors influence prices.

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